Market Overview

Hess Midstream Partners LP Reports Estimated Results for the Second Quarter of 2018

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Second Quarter Highlights:

  • Net income was $94.6 million. Net cash provided by operating
    activities was $141.5 million.
  • Adjusted EBITDA1 was
    $125.2 million, of which $24.2 million was attributable to Hess
    Midstream Partners LP.
  • DCF1 of Hess Midstream
    Partners LP was $23.9 million resulting in 1.24x DCF coverage of
    distributions for the period.
  • Increased quarterly cash distribution to $0.3452 per unit, an
    increase of 3.6% compared with the prior quarter or 15% on an
    annualized basis, consistent with targeted long-term annual
    distribution growth per unit.
  • Compared with the prior-year quarter, throughput volumes
    increased 20% for gas gathering, 26% for crude oil gathering, 21% for
    gas processing and 42% for crude oil terminaling, driven by Hess
    Corporation's growing production, capturing additional third-party
    customer volumes, and strong operating performance of our assets.
  • Revolver remains undrawn with capacity of $300 million available
    to fund future growth.

2018 Revised Full Year Guidance:

  • Net income guidance increased to $350 - $375 million and
    Adjusted EBITDA
    1 guidance
    increased to $475 - $500 million, a $15 million increase from the
    midpoint of previous guidance on expected stronger organic growth and
    lower operating costs. DCF
    1
    guidance increased to $91 - $96 million.
  • Expansion capital guidance increased to $340 million, or $68
    million net to Hess Midstream Partners LP, primarily due to capturing
    additional Hess Corporation and third-party crude oil and natural gas
    volumes.
  • Volume guidance increased for gathering and terminaling
    throughputs, driven by growing Hess Corporation and third-party
    production.

Hess Midstream Partners LP (NYSE:HESM) ("Hess Midstream") today reported
second quarter 2018 net income of $94.6 million compared with net income
of $68.1 million for the second quarter of 2017. After deduction for
noncontrolling interests, net income attributable to Hess Midstream was
$17.8 million, or $0.32 per common unit. Hess Midstream generated
Adjusted EBITDA of $24.2 million and DCF of $23.9 million for the second
quarter of 2018.

"We reported strong financial and operating results for the
second quarter of 2018, primarily driven by significant increases in
natural gas and crude oil gathering throughput volumes compared to the
prior-year quarter. The momentum is expected to continue through
the second half of the year, as indicated by our increased 2018
operating and financial guidance," said John Gatling, Chief Operating
Officer of Hess Midstream. "Hess Midstream remains focused on executing
its infrastructure strategy to enhance our ability to capture
significant additional production volumes from Hess and third parties."

Financial Results

The Partnership'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 second quarter of 2018 were
$164.7 million, including $12.8 million of shortfall fees. Revenues were
up from $138.3 million in the prior-year quarter primarily attributable
to higher throughput volumes and tariff rates. Total costs and expenses
in the second quarter of 2018 and 2017 were $69.7 million. Net income
for the second quarter of 2018 was $94.6 million and net cash provided
by operating activities was $141.5 million.

Adjusted EBITDA was $125.2 million, of which $24.2 million is
attributable to Hess Midstream. DCF of $23.9 million resulted in a
1.24x DCF coverage ratio relative to distributions.

At the end of the second quarter 2018, Hess Midstream's $300.0 million
revolving credit facility remained undrawn and available to fund organic
growth projects or acquisitions from Hess Corporation ("Hess"), Hess
Infrastructure Partners or third parties.

Operational Highlights

Hess Midstream continued to demonstrate strong organic growth in the
second quarter of 2018 as we leveraged our capital investments and
utilized our system capacity to capture growth from Hess and third
parties in the Bakken through our advantaged infrastructure.
Second quarter 2018 throughput volumes increased 20% for gas gathering,
26% for crude oil gathering, 21% for gas processing and 42% for crude
oil terminaling, compared to the prior-year quarter, driven by growing
Hess and third-party volumes, and strong operating performance of our
assets, including the Tioga Gas Plant, Hawkeye Gas Facility, Hawkeye Oil
Facility, and Johnson's Corner Header System. Little Missouri 4 ("LM4")
gas processing plant construction is progressing and remains on track
for completion by end of 2018 with operations beginning to ramp up in
early 2019.

Capital Expenditures

Gross capital expenditures for the second quarter of 2018 totaled
$98.3 million, including $79.3 million of expansion capital
expenditures, $17.0 million of equity investments associated with the
LM4 gas processing plant, and $2.0 million of maintenance capital
expenditures. Under the contribution agreement we entered into with Hess
Infrastructure Partners in connection with the IPO, Hess Infrastructure
Partners reimbursed $1.0 million of gross maintenance capital
expenditures incurred during the second quarter of 2018. Capital
expenditures in the prior-year quarter were $17.1 million, including
$15.0 million of expansion capital expenditures and $2.1 million of
maintenance capital expenditures. The increase in expansion capital
expenditures was primarily attributable to well connect system build out
to capture additional Hess and third-party crude oil and natural gas
production, and acceleration of engineering, procurement and
construction work related to our planned gas compression expansion
projects to support Hess and third-party growth. Net capital
expenditures attributable to Hess Midstream Partners LP in the
second quarter of 2018 totaled $19.7 million, including $15.9 million of
expansion capital expenditures, $3.4 million of equity investments
associated with the LM4 gas processing plant, and $0.4 million of
maintenance capital expenditures.

Quarterly Cash Distributions

On July 23, 2018, our general partner's board of directors declared a
cash distribution of $0.3452 per unit for the second quarter of 2018, an
increase of 3.6% over the distribution for the first quarter of 2018.
The distribution is expected to be paid on August 13, 2018 to
unitholders of record as of the close of business on August 2, 2018.

Hess Midstream is targeting long-term 15% annual distribution growth per
unit with at least a 1.1x distribution coverage ratio.

Guidance

Hess Midstream is updating its guidance for full year 2018 as follows:

     
Year Ending
December 31, 2018
(Unaudited)
Financials (millions)
Net income $ 350 - 375
Consolidated Adjusted EBITDA $ 475 - 500
Adjusted EBITDA attributable to Hess Midstream Partners LP $ 93 - 98
DCF of Hess Midstream Partners LP $ 91 - 96
Expansion capital, net to Hess Midstream Partners LP $ 68
Maintenance capital, net to Hess Midstream Partners LP $ 2
 

Year Ending

December 31, 2018
(Unaudited)
Throughput volumes (thousands)
Gas gathering - Mcf of natural gas per day 245 - 255
Crude oil gathering - bopd 80 - 90
Gas processing - Mcf of natural gas per day 225 - 235
Crude terminals - bopd 90 - 100
 

Investor Webcast

Hess Midstream will review second quarter financial and operating
results and other matters on a webcast today at 12:30 p.m. Eastern
Daylight 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 5099127.
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.

  Second Quarter
(unaudited)
2018   2017
 
(in millions, except ratio and per-unit data)

Reconciliation of Adjusted EBITDA attributable to Hess
Midstream Partners LP

and Distributable Cash Flow
attributable to Hess Midstream Partners LP

to net income:

Net income $ 94.6 $ 68.1
Plus:
Depreciation expense 30.2 28.5
Interest expense, net   0.4   0.5
Adjusted EBITDA 125.2 97.1
Less:
Adjusted EBITDA prior to the IPO on April 10, 2017   -   7.9
Adjusted EBITDA subsequent to the IPO on April 10, 2017 125.2 89.2
Less:
Adjusted EBITDA attributable to noncontrolling interest(a)   101.0   72.2
Adjusted EBITDA attributable to Hess Midstream Partners LP $ 24.2 $ 17.0
Less:
Cash interest paid, net 0.1 0.2
Maintenance capital expenditures   0.2   -
Distributable cash flow attributable to Hess Midstream Partners LP $ 23.9 $ 16.8
 

Reconciliation of Adjusted EBITDA attributable to Hess
Midstream Partners LP

and Distributable Cash Flow
attributable to Hess Midstream Partners LP

to net cash
provided by operating activities:

Net cash provided by operating activities $ 141.5 $ 102.2
Changes in assets and liabilities (16.2 ) (5.3 )
Amortization of deferred financing costs (0.2 ) (0.2 )
Unit-based compensation (0.3 ) (0.1 )
Interest expense, net   0.4   0.5
Adjusted EBITDA $ 125.2 $ 97.1
Less:
Adjusted EBITDA prior to the IPO on April 10, 2017 - 7.9
Adjusted EBITDA attributable to noncontrolling interest(a)   101.0   72.2
Adjusted EBITDA attributable to Hess Midstream Partners LP $ 24.2 $ 17.0
Less:
Cash interest paid, net 0.1 0.2
Maintenance capital expenditures   0.2   -
Distributable cash flow attributable to Hess Midstream Partners LP $ 23.9 $ 16.8
Distributed cash flow 19.2 15.1
Distribution coverage ratio 1.24 x 1.11 x
Distribution per unit(b) $ 0.3452 $ 0.2703

(a)

 

Reflects Hess Infrastructure Partners' 80% noncontrolling
economic interest in the net income of Hess North Dakota Pipelines
Operations LP, Hess TGP Operations LP and Hess North Dakota Export
Logistics LP.

(b)

Distribution for the second quarter 2017 was prorated from the
closing of Hess Midstream's IPO on April 10, 2017 and equates to
the minimum quarterly distribution of $0.3000 per unit on a full
quarter basis.

 
   
Guidance
Year Ending
December 31, 2018
(Unaudited)
(in millions)  

Reconciliation of Adjusted EBITDA attributable to Hess
Midstream
Partners LP and Distributable Cash Flow

attributable
to Hess Midstream Partners LP to

net income:

Net income $ 350 - 375
Plus:
Depreciation expense 123
Interest expense, net     2
Adjusted EBITDA 475 - 500
Less:
Adjusted EBITDA attributable to noncontrolling interest(a)   382 - 402
Adjusted EBITDA attributable to Hess Midstream Partners LP 93 - 98
Less:
Cash interest paid, net 1
Maintenance capital expenditures     1
Distributable cash flow attributable to Hess Midstream Partners LP $ 91 - 96

(a)

 

Reflects Hess Infrastructure Partners' 80% noncontrolling
economic interest in the net income of Hess North Dakota Pipelines
Operations LP, Hess TGP Operations LP and Hess North Dakota Export
Logistics LP.

 

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.

 

HESS MIDSTREAM PARTNERS LP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS, EXCEPT PER-UNIT DATA)

 
    Second     Second     First
Quarter Quarter Quarter
2018 2017 2018

Statement of operations

Revenues
Affiliate services $ 164.5 $ 138.3 $ 156.8
Other income   0.2   -   0.2
Total revenues   164.7   138.3   157.0
Costs and expenses

Operating and maintenance expenses
(exclusive of depreciation
shown separately below)

37.1 38.8 34.6
Depreciation expense 30.2 28.5 30.0
General and administrative expenses   2.4   2.4   3.1
Total costs and expenses   69.7   69.7   67.7
Income from operations 95.0 68.6 89.3
Interest expense, net   0.4   0.5   0.3
Net income $ 94.6 $ 68.1 $ 89.0
Less: Net income prior to the IPO on April 10, 2017 - 5.1 -
Less: Net income attributable to noncontrolling

interest

  76.8   51.6   72.0
Net income attributable to Hess Midstream Partners LP   17.8   11.4   17.0

Less: General partner interest in net income attributable
to
Hess Midstream Partners LP

  0.4   0.2   0.3

Limited partners' interest in net income attributable
to Hess
Midstream Partners LP

$ 17.4 $ 11.2 $ 16.7
Net income per limited partner unit (basic and diluted):
Common $ 0.32 $ 0.21 $ 0.30
Subordinated $ 0.32 $ 0.21 $ 0.30
Weighted average limited partner units outstanding:
Basic:
Common 27.3 26.1 27.3
Subordinated 27.3 26.1 27.3
Diluted:
Common 27.4 26.1 27.3
Subordinated 27.3 26.1 27.3
 
 

HESS MIDSTREAM PARTNERS LP
SUPPLEMENTAL FINANCIAL
DATA (UNAUDITED)

(IN MILLIONS, EXCEPT PER-UNIT DATA)

 
    Six Months Ended June 30,
2018     2017

Statement of operations

Revenues
Affiliate services $ 321.3 $ 268.6
Other income   0.4   -
Total revenues   321.7   268.6
Costs and expenses

Operating and maintenance expenses
(exclusive of depreciation
shown separately below)

71.7 77.7
Depreciation expense 60.2 55.3
General and administrative expenses   5.5   3.9
Total costs and expenses   137.4   136.9
Income from operations 184.3 131.7
Interest expense, net   0.7   0.5
Net income $ 183.6 $ 131.2
Less: Net income prior to the IPO on April 10, 2017 - 68.2
Less: Net income attributable to noncontrolling interest   148.8   51.6
Net income attributable to Hess Midstream Partners LP   34.8   11.4

Less: General partner interest in net income attributable
to
Hess Midstream Partners LP

  0.7   0.2

Limited partners' interest in net income attributable
to Hess
Midstream Partners LP

$ 34.1 $ 11.2
Net income per limited partner unit (basic and diluted):
Common $ 0.63 $ 0.21
Subordinated $ 0.63 $ 0.21
Weighted average limited partner units outstanding:
Basic:
Common 27.3 26.1
Subordinated 27.3 26.1
Diluted:
Common 27.4 26.1
Subordinated 27.3 26.1
 
 

HESS MIDSTREAM PARTNERS LP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS, EXCEPT PER-UNIT DATA)

 
    Second Quarter 2018
Gathering    

Processing
and
Storage

   

Terminaling
and Export

 

Interest
and Other

  Total

Statement of operations

Revenues
Affiliate services $ 81.9 $ 62.9 $ 19.7 $ - $ 164.5
Other income   -   -   0.2   -   0.2
Total revenues   81.9   62.9   19.9   -   164.7
Costs and expenses

Operating and maintenance expenses (exclusive of
depreciation
shown separately below)

16.1 13.4 7.6 - 37.1
Depreciation expense 15.4 10.9 3.9 - 30.2
General and administrative expenses   0.9   0.4   -   1.1   2.4
Total costs and expenses   32.4   24.7   11.5   1.1   69.7
Income (loss) from operations 49.5 38.2 8.4 (1.1 ) 95.0
Interest expense, net   -   -   -   0.4   0.4
Net income (loss) 49.5 38.2 8.4 (1.5 ) 94.6

Less: Net income (loss) attributable to
noncontrolling
interest

  39.8   30.5   6.5   -   76.8

Net income (loss) attributable to Hess Midstream Partners LP

$ 9.7   $ 7.7 $ 1.9 $ (1.5 ) $ 17.8
 

Second Quarter 2017

Gathering

Processing
and
Storage

Terminaling
and Export

Interest
and Other

Total

Statement of operations

Revenues
Affiliate $ 66.5 $ 55.7 $ 16.1 $ - $ 138.3
Total revenues   66.5   55.7   16.1   -   138.3
Costs and expenses

Operating and maintenance expenses (exclusive of
depreciation
shown separately below)

15.1 14.0 9.7 - 38.8
Depreciation expense 13.8 10.9 3.8 - 28.5
General and administrative expenses   0.7   0.4   0.3   1.0   2.4
Total costs and expenses   29.6   25.3   13.8   1.0   69.7
Income (loss) from operations 36.9 30.4 2.3 (1.0 ) 68.6
Interest expense   -   -   -   0.5   0.5
Net income (loss) 36.9 30.4 2.3 (1.5 ) 68.1

Less: Net income (loss) prior to the IPO
on April 10, 2017

2.2 3.2 (0.3 ) - 5.1

Less: Net income (loss) attributable to
noncontrolling
interest

  27.7   21.8   2.1   -   51.6

Net income (loss) attributable to Hess Midstream Partners LP

$ 7.0 $ 5.4 $ 0.5 $ (1.5 ) $ 11.4
 
 

HESS MIDSTREAM PARTNERS LP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS, EXCEPT PER-UNIT DATA)

 
    First Quarter 2018
Gathering    

Processing
and
Storage

   

Terminaling
and Export

   

Interest
and Other

  Total

Statement of operations

Revenues
Affiliate services $ 78.5 $ 58.3 $ 20.0 $ - $ 156.8
Other income   -   -   0.2   -   0.2
Total revenues   78.5   58.3   20.2   -   157.0
Costs and expenses

Operating and maintenance expenses (exclusive of
depreciation
shown separately below)

13.2 13.3 8.1 - 34.6
Depreciation expense 15.2 10.9 3.9 - 30.0
General and administrative expenses   0.9   0.9   0.1   1.2   3.1
Total costs and expenses   29.3   25.1   12.1   1.2   67.7
Income (loss) from operations 49.2 33.2 8.1 (1.2 ) 89.3
Interest expense, net   -   -   -   0.3   0.3
Net income (loss) 49.2 33.2 8.1 (1.5 ) 89.0

Less: Net income (loss) attributable to
noncontrolling
interest

  39.2   26.2   6.6   -   72.0

Net income (loss) attributable to Hess Midstream

Partners LP

$ 10.0 $ 7.0 $ 1.5 $ (1.5 ) $ 17.0
 
 

HESS MIDSTREAM PARTNERS LP
SUPPLEMENTAL OPERATING DATA
(UNAUDITED)

 
  Second     Second     First
Quarter Quarter Quarter
2018 2017 2018
     

Throughput volumes (thousands)

Gas gathering - Mcf of natural gas per day 253 210 233
Crude oil gathering - bopd 82 65 80
Gas processing - Mcf of natural gas per day 237 196 214
Crude terminals - bopd 94 66 92
NGL loading - blpd 15 12 11
 
Six Months Ended June 30,
2018 2017

Throughput volumes (thousands)

Gas gathering - Mcf of natural gas per day 243 197
Crude oil gathering - bopd 81 64
Gas processing - Mcf of natural gas per day 226 182
Crude terminals - bopd 93 60
NGL loading - blpd 13 11
 

_______________________

1   Adjusted EBITDA and DCF are non-GAAP measures. Definitions and
reconciliations of these non-GAAP measures to GAAP reporting
measures appear in the following pages of this release.
 

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