Global Infrastructure Entities Divest $444 Million in Hess Midstream Shares

Global Infrastructure Investors II, LLC, and its affiliated entities have finalized a major transaction involving shares of Hess Midstream LP, a firm engaged in crude petroleum operations. Recent filings reveal that these entities have divested their entire stake in Class A shares of the company.

The transaction, executed on September 20, 2024, involved the sale of 12,650,000 Class A shares at an average price of $35.12 per share, culminating in a total sale value of approximately $444.27 million. Consequently, their holdings in Hess Midstream LP have been reduced to zero Class A shares.

Before this sale, Global Infrastructure Investors II, LLC, along with affiliated entities, converted an equivalent number of Opco Class B Units into Class A shares of Hess Midstream LP at no cost, as reflected by the transaction price of $0.00 per share. This conversion was promptly followed by the sale of the newly acquired Class A shares.

The entities involved have a complex ownership structure, with each potentially deemed to beneficially own the securities held by others. However, they have disclaimed beneficial ownership of these securities beyond their monetary interest.

As a result of these transactions, Hess Midstream LP now has a more concentrated group of principal shareholders, following the complete exit of the aforementioned entities. Market observers are expected to keep a close watch on how this substantial divestment impacts the trading dynamics and ownership concentration of Hess Midstream LP in the future.

In other developments, Hess Midstream LP has reported strong performance for the second quarter of 2024, exceeding production expectations and raising its full-year guidance. The company recorded increases of 7% in gas processing volumes and 8% in oil terminaling volumes from the previous quarter. Additionally, Hess Midstream has announced a public offering of 10 million Class A shares, which is being managed by a financial institution. The firm has also agreed to repurchase approximately $100 million worth of Class B units, a decision unanimously approved by the board of its general partner.

These recent activities highlight Hess Midstream’s strategic planning and operational capabilities. The company anticipates Bakken net production to range between 200,000 to 205,000 barrels of oil equivalent per day in the third quarter. Furthermore, Hess Midstream is targeting adjusted free cash flow of $675 million to $725 million for 2024. Future goals include maintaining a solid leverage ratio while returning capital to shareholders, with expansion plans on the horizon for 2027 to enhance gas processing capacity.

In light of this significant transaction, it’s important to consider Hess Midstream LP’s current financial position and market stance. The company has consistently demonstrated a commitment to returning shareholder value, evidenced by an uninterrupted dividend payment record over the past eight years, alongside a streak of increasing its dividend for seven consecutive years. This dedication is further highlighted by an attractive dividend yield of 7.49% for the twelve months ending in the second quarter of 2024.

While Hess Midstream LP is trading at a relatively high Price/Earnings (P/E) ratio of 19.48, reflecting a premium in comparison to short-term earnings growth, the firm has demonstrated robust performance over the past five years. Analysts forecast profitability for the current year, underpinned by a positive return on assets of 16.6% during the same timeframe.

From a market viewpoint, Hess Midstream LP has a market capitalization of $7.84 billion, with the stock achieving a year-to-date price total return of 19.44%, indicating strong performance this year. Despite the recent divestiture by Global Infrastructure Investors II, LLC, the company’s financial strength and market performance may continue to draw investor attention.

This article was generated with the support of AI and reviewed by an editor.