Hess Infrastructure Partners LP Announces Proposed Acquisition of Hess Corporation’s Bakken Water Business
Hess Infrastructure Partners LP (“HIP” or the “Partnership”), a
midstream energy joint venture between Hess Corporation (“Hess”) (NYSE:
HES) and Global Infrastructure Partners (“GIP”) and the sponsor of Hess
Midstream Partners LP, a publicly traded master limited partnership
(“Hess Midstream”), today announced that it has entered into a
Memorandum of Understanding (“MOU”) with Hess to acquire Hess’ existing
Bakken water services business for $225 million in cash, subject to
customary adjustments. The parties expect to execute definitive
agreements and close the transaction in the first quarter of 2019,
subject to receipt of regulatory approvals. Under the terms contemplated
by the MOU, the Partnership will offer Hess Midstream a right of first
offer to acquire the water services business in the event the
Partnership decides to sell the water services business in the future.
“Adding an integrated water business is a great opportunity for HIP,”
said John Gatling, Chief Operating Officer of HIP. “Hess has been
actively building the water infrastructure necessary to meet its
accelerated Bakken growth profile in tandem with HIP’s oil and gas
infrastructure buildout. The expected growth in produced water volumes
over the next several years and underdeveloped basin infrastructure
creates an attractive opportunity for continued investment to build
additional infrastructure for Hess and third parties.”
The scope of the water services business includes substantially all of
Hess’ Bakken produced water gathering assets and saltwater disposal
services in North Dakota, which currently consist of over 150 miles of
existing Hess water gathering pipelines capturing about 24,000 barrels
per day of produced water.
“Consistent with our commitment to deliver stable cash flows, the water
services business is expected to be underpinned by a long-term contract
that includes minimum volume commitments for both produced water
gathering and disposal services, and annual tariff rate recalculations
for the produced water gathering services,” said Jonathan Stein, Chief
Financial Officer of HIP. “This contract structure is expected to be
complementary with the current contract structure of our existing
assets, making the water services business a strong addition to the HIP
portfolio.”
About Hess Infrastructure Partners LP
HIP is a midstream energy joint venture between Hess and GIP. The
Partnership owns interests in various operating companies that provide a
diverse mix of midstream oil and natural gas services in the core of the
Bakken and Three Forks shale plays in the Williston Basin area of North
Dakota. The Partnership also owns a 100% interest in the general partner
of Hess Midstream.
About Hess Midstream Partners LP
Hess Midstream 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 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.
About Hess Corporation and Global Infrastructure Partners
Hess is a global independent energy company engaged in the exploration
and production of crude oil and natural gas. GlP is an independent
infrastructure fund that invests in infrastructure assets and businesses
across three core sectors: energy, transportation and water/waste.
Cautionary Statement Relevant to Forward-Looking Information
This press release includes forward-looking statements regarding future
events. These forward-looking statements are based on the Partnership’s
current plans and expectations and involve a number of risks and
uncertainties that could cause actual results and events to vary
materially from the results and events anticipated or implied by such
forward-looking statements. These risks include the possibility that the
proposed acquisition of Hess’ Bakken water services business by HIP will
not be consummated on the expected timeline, or at all, that Hess
Midstream does not receive a right of first offer on the water services
business, that HIP may elect not to offer the water services business
for sale in the future, and that produced water volumes in the Bakken do
not grow as expected, or at all. While the Partnership may elect to
update these forward-looking statements at some point in the future, it
specifically disclaims any obligation to do so, even if new information
becomes available in the future. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date of this press release.
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