HOUSTON - Hess Midstream LP (NYSE: HESM), a midstream oil and gas company, has entered into an agreement to repurchase approximately $100 million worth of Class B units from its affiliates, Hess Corporation (NYSE:HES) and Global Infrastructure Partners.
The repurchase plan was approved by the Board of Directors of Hess Midstream's general partner, with the support of its independent conflicts committee.
The transaction involves Hess Midstream Operations LP, a subsidiary of Hess Midstream, repurchasing 2,816,901 Class B units, representing about 1.2% of the consolidated company.
The units are being bought back at a price of $35.50 each, equivalent to the closing price of Hess Midstream's Class A shares on March 11, 2024. Following the repurchase, the public will own approximately 35.4%, Global Infrastructure Partners 26.8%, and Hess Corporation 37.8% of Hess Midstream.
The repurchase is expected to be finalized on March 14, 2024, funded through borrowings under Hess Midstream's existing credit facility. The cancellation of the repurchased units is anticipated to increase distributable cash flow per Class A share, potentially allowing for growth in distributions beyond the company's annual target of at least 5% through 2026.
Jonathan Stein, Chief Financial Officer of Hess Midstream, stated that the company has returned $1.65 billion to shareholders since early 2021 through similar transactions, reducing total unit count by over 20%. Stein also mentioned that after this repurchase, Hess Midstream aims to maintain over $1.25 billion in financial flexibility through 2026 to support further repurchases if possible.
Hess Midstream, known for its fee-based, growth-oriented operations, manages a variety of midstream assets, primarily in North Dakota's Bakken and Three Forks Shale plays. The company's strategy emphasizes shareholder returns and maintaining a strong balance sheet.
This article is based on a press release statement from Hess Midstream LP.
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