A Hess Midstream subsidiary intends to offer $500 million in aggregate principal senior unsecured notes, due 2029, in a private offering, the company said on May 8.
Subsidiary Hess Midstream Operations LP (HESM OpCo) will offer the notes. Hess Midstream said it intends to use the net proceeds from the offering to reduce outstanding debt under its revolving credit facility, with any remaining proceeds to be used for general corporate purposes.
The notes are being sold only to persons reasonably believed to be “qualified institutional buyers” in the U.S. pursuant to Rule 144A and outside the U.S. to non-U.S. persons in compliance with Regulation S under the Securities Act of 1933.
The notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
In a May 8 report, Fitch Ratings assigned a BB+'/'RR4 rating to the subsidiary’s proposed unsecured notes.
“The proposed new issuance is not expected to have a meaningful impact on HESM OpCo's leverage and credit profile. Fitch has reviewed preliminary terms of the issuance, and the assigned ratings assume no material variations in the final terms,” Fitch said.
HESM OpCo's ratings continue to reflect Fitch's expectations of leverage to be slightly above 3.0x, given the trends in debt-funded share buybacks.
“The ratings are further bolstered by HESM OpCo's strong cash flow profile. Risks associated with single-basin focused midstream service providers with high customer concentration remains causes of concern,” Fitch said.
Recommended Reading
Aramco Credits Adaptability, Collaboration for Driving Innovation
2024-05-15 - Aramco’s implementation of different approaches has led to the creation and commercialization of newer products, said Max Deffenbaugh, principal scientist for Aramco, at the 2024 Offshore Technology Conference in Houston.
Haynesville’s Harsh Drilling Conditions Forge Tougher Tech
2024-04-10 - The Haynesville Shale’s high temperatures and tough rock have caused drillers to evolve, advancing technology that benefits the rest of the industry, experts said.
AI Poised to Break Out of its Oilfield Niche
2024-04-11 - At the AI in Oil & Gas Conference in Houston, experts talked up the benefits artificial intelligence can provide to the downstream, midstream and upstream sectors, while assuring the audience humans will still run the show.
Exclusive: Cost-effective Benefits of Extracting from Mature Assets
2024-05-13 - Baker Hughes' well abandonment leader Bart Joppe details the importance of extracting resources from mature assets and the company's approach to managing a well, in this Hart Energy Exclusive interview.
Quantum Capital’s View on AI: Lots of Benefits, Pain Points
2024-05-16 - The energy industry is lagging in the race to implement AI, but Sebastian Gass, CTO of Quantum Capital Group, offered a few solutions during Hart Energy’s 2024 SUPER DUG Conference & Expo.