HES Stock

[HESM] Hess Midstream LP Thesis 2026: Bakken Pipeline Drives Hess Sponsorship Capital Return

Hess Midstream LP (NYSE: HESM) FY2025 revenue ~$1.55-1.65B (+5-8%) with adj. EPS ~$1.85-2.05 reflecting continued post-2024 ~$1.55-1.65B aggregate Williston Basin Bakken Midstream revenue (~$0.95-1.0B aggregate Gathering + ~$0.30-0.35B aggregate Processing + Storage + ~$0.30-0.35B aggregate Terminaling + Export Logistics + Other) under continued President + CEO John Gatling since June 2023 (~2-year tenure as Hess Midstream CEO). One of the largest US specialty Williston Basin Bakken Midstream Master Limited Partnerships (MLPs). Founded April 2017 as Hess Midstream Partners LP via Hess Corporation midstream IPO (~8-year heritage); selected post-April 2017 NYSE IPO; selected post-December 2019 Hess Midstream-Hess Midstream Partners simplification merger ($6.0B+ simplified MLP structure + Class A + Class B units); selected post-October 2023 Chevron-Hess Corporation pending acquisition ($53B+; pending Hess sponsorship transition to Chevron via Chevron-Hess merger); selected post-June 2023 John Gatling CEO appointment. Headquartered in Houston Texas; ~600-700 employees globally with ~$2.5-3.0B gross plant + property + equipment Williston Basin Bakken + Three Forks Shale Gathering + Processing + Storage + Terminaling footprint. One primary business: Williston Basin Bakken Midstream MLP ~100%. Structure: Gathering ~60%+ ($0.95-1.0B), Processing + Storage ~20%+ ($0.30-0.35B), Terminaling + Export Logistics + Other ~20% ($0.30-0.35B). Geographic mix: North Dakota + Montana (Williston Basin) ~99%+. Williston Bakken Gathering + Processing pipeline (~$0.95-1.0B): ~$0.95-1.0B aggregate Gathering revenue (~60%+ revenue mix); selected primary Hess Corporation ~37% LP unit ownership; selected ~70-75% Hess throughput exposure; selected ~25-30% Third-Party throughput; selected ~3-4% Same-Store volume growth; selected Minimum Volume Commitments cash flow stability. Processing + Storage + Terminaling + Export Logistics pipeline: selected continued post-2017 Tioga Gas Plant Processing + Williston Basin Crude Oil + NGL Storage + Crude Oil + Natural Gas + NGL Terminaling + Export Logistics; selected ~$0.60-0.70B combined revenue (~40%+; ~25-year MVC + Tariff Floor cash flow visibility); selected ~$0.30-0.45B aggregate annual organic growth Capex; selected ~$0.7-0.9B aggregate annual Free Cash Flow. President + CEO John Gatling since June 2023 (~2-year tenure); CFO Jonathan Stein. Capital position: ~$2.85 aggregate annual distribution (~75-80% DCF payout; ~7.5-8.5% distribution yield; ~+5% annual distribution growth target); ~$300-450M aggregate FY2025 unit buybacks (post-2023 active capital return + Hess Corporation unit repurchases); aggregate capital return ~$760-1,000M FY2025; net leverage ~3.0-3.5x Net Debt/EBITDA; investment-grade Baa3/BBB- credit rating; ~218-222M diluted Class A + Class B units; weighted average debt maturity ~5-6 years. FY2026 thesis: Williston Bakken Gathering + Processing pipeline + Processing + Storage + Terminaling + Export Logistics pipeline + ~+5% aggregate annual distribution growth target + ~7.5-8.5% aggregate distribution yield + post-2023 Hess Corporation Chevron acquisition pending sponsorship transition + ~25-year MVC + Tariff Floor cash flow visibility. Risks: post-2023 Chevron-Hess Corporation acquisition closing + post-Chevron Hess sponsorship transition + ONEOK + Targa Resources + Kinder Morgan + Williams + Crestwood Equity Partners (post-Energy Transfer) + Western Midstream + Energy Transfer + Enterprise Products Partners competitive displacement + Williston Basin Bakken Shale Oil & Gas E&P concentration considerations + WTI Crude Oil price cycle considerations + Federal Reserve interest rate cycle considerations + organic growth Capex execution considerations.