Hess Midstream LP Q4 FY2024 earnings call

• 2024 was a year of strong performance execution with significant volume growth, including 14% year-over-year growth in gas processing throughputs and progress on key multiyear projects.
• 2025 plans include approximately 10% growth in volumes across oil and gas systems, with adjusted EBITDA projected to increase by 11% at the midpoint compared to 2024.
• Long-term outlook through 2027 includes gas volumes growing by approximately 10% in 2026 and 5% in 2027, oil volumes growing by ~5% annually, and construction beginning in 2024 on the 125 million cubic foot per day Capa Gas Plant.
• 2025 capital program is expected to be approximately $300 million, with $125 million for ongoing gathering system well connects and maintenance, and $175 million for project-based investments.

In the fourth quarter of 2024, Hess Midstream's gas processing volumes averaged 447 million cubic foot per day, crude terminaling volumes averaged 127,000 barrels of oil per day, and water gathering volumes averaged 130,000 barrels of water per day. For full year 2024, gas processing volumes averaged 420 million cubic foot per day, crude terminaling volumes averaged 123,000 barrels of oil per day, and water gathering volumes averaged 125,000 barrels of water per day, resulting in a full year adjusted EBITDA of $1.136 billion. For 2025, gas processing volumes are anticipated to average between 455 million and 465 million cubic foot per day, crude terminaling volumes between 130,000 and 140,000 barrels of oil per day, and water gathering volumes between 120,000 and 130,000 barrels of water per day. Adjusted EBITDA for 2025 is projected to increase by 11% at the midpoint compared to 2024, with an expected range of $1.235 billion to $1.285 billion. Gas volumes are expected to grow by approximately 10% in 2026 and 5% in 2027, while oil volumes are expected to grow by approximately 5% annually over the same period.

• For full year 2025, anticipate approximately 10% growth in volumes across oil and gas systems, with gas processing volumes averaging 455-465 million cubic foot per day, crude terminaling 130,000-140,000 barrels per day, and water gathering 120,000-130,000 barrels per day. Adjusted EBITDA projected $1.235B-$1.285B.
• Gas volumes expected to grow ~10% in 2026 and 5% in 2027, oil volumes ~5% annually through 2027.
• Construction of the 125 million cubic foot per day Capa Gas Plant begins in 2024 and is expected to be operational in 2027 to address expected gas processing capacity exceedance in 2027.

• Risks include those set forth in the Risk Factors section of Hess Midstream's filings with the SEC.

Q: On your multiyear growth outlook, how is growth based off MVCs and potential upside to EBITDA growth target?

A: Jonathan Stein and John Gatling discussed that MVCs provide visibility to volumes, with Hess' production driving growth, and the GORs in the basin increasing supporting the growth trajectory.

Q: How is HESM thinking about growing in Bakken and expanding beyond?

A: John Gatling stated no plans to expand outside of Bakken, with growth underpinned by Hess' production and potential third-party opportunities, and focus on organic growth within Bakken.

Q: Color on CapEx budget higher near term and longer-term growth CapEx?

A: John Gatling and Jonathan Stein mentioned CapEx driven by activity phasing due to Hess' efficient drilling and productivity, with spending expected to step down post-2027 as growth infrastructure is in place.

Q: Thoughts on capital allocation program extended into '27 and sponsor actions?

A: Jonathan Stein discussed the return of capital framework with 5% annual distribution growth and potential for multiple unit repurchases, considering ownership changes but continuing the program.

Q: How does first quarter guidance account for weather impacts and basin recovery?

A: John Gatling and Jonathan Stein noted first quarter impacted by January weather, basin down ~10% but expected recovery, with EBITDA Q2-Q4 expected to be up 11% on average.

Q: Expectations for EBITDA and costs seasonally in 2025?

A: Jonathan Stein mentioned seasonality with Q1 typically lower, Q2-Q3 higher activity, and Q4 variable due to weather and allocations, with steady volume growth quarter-on-quarter.

Q: Expectations for repurchases in 2025?

A: Jonathan Stein stated expect multiple repurchases per year, consistent with past activity, not a set amount but multiple repurchases anticipated.