Hess Midstream LP Q2 FY2025 earnings call

Key Points

• Excited to work with new Chevron colleagues and new board members, including Chevron's Andy Walz as Chair.
• Mike Chadwick's new role as Chief Financial Officer is highlighted, with Jonathan Stein excited about his new CEO role at Hess Midstream.
• Strong operational performance with throughput increases across all segments in Q2 2025.
• Financial performance: estimated ~11% adjusted EBITDA growth in 2025, targeting 5% annual distribution growth per Class A share through 2027.
• Capital program focus: completion of 2 new compressor stations and associated gathering systems, and progress on the Capa gas plant; full-year 2025 capital expenditures expected to be ~$300 million.

In the second quarter of 2025, Hess Midstream achieved record operating performance. Gas processing throughput averaged 449 million cubic feet per day, oil terminaling was 137,000 barrels per day, and water gathering was 138,000 barrels per day. Throughput increased across all segments, with gas processing volumes up approximately 6% and oil terminaling volumes up approximately 10% from the first quarter. Revenue contributions: gathering revenues rose by approximately $16 million, processing revenues by ~$9 million, terminaling revenues by ~$4 million, and third-party services and other income by ~$1 million.

Guidance Details

• Reaffirmed full-year 2025 oil and gas throughput guidance.
• For Q3 2025, expected net income is approximately $175 million to $185 million and adjusted EBITDA is approximately $315 million to $325 million, reflecting higher volumes and revenues partially offset by seasonally higher maintenance costs.
• Full-year 2025 net income guidance updated to $685 million to $735 million, and adjusted free cash flow guidance to $725 million to $775 million, including impact of incremental $15 million interest expense and $15 million income tax expense.

Risks include those set forth in Hess Midstream's filings with the SEC, which are known and unknown uncertainties that may cause actual results to differ from forward-looking statements.

Q: Insight into Chevron's view on Bakken rig count and sensitivity to HESM EBITDA growth A: John Gatling mentioned current rig count and that an update on the development plan will happen towards the end of the year Q: Appetite for buybacks at current prices A: Mike Chadwick said there is about $1.25 billion of financial flexibility through 2027 and expect multiple repurchases a year as done in the past Q: GORs trending and Bakken outlook A: John Gatling stated GORs have been consistent, and Bakken gas is expected to grow over the long term Q: Guidance range and variances A: John Gatling and Mike Chadwick discussed a strong Q2 performance, with expected maintenance in the second half but remaining comfortable with guidance Q: GIP exit and governance A: John Gatling said GIP exit was part of disciplined execution, and Jonathan Stein discussed a new governance mechanism requiring approval of 1 independent director for certain key decisions Q: Chevron partnership and 200,000 BOE/day target A: John Gatling and Jonathan Stein talked about the partnership between upstream and midstream, and the 200,000 BOE/day target based on infrastructure and development plan Q: Upstream efficiencies and inventory life A: John Gatling mentioned extended laterals improving economics and unlocking rock, continuing to be a tailwind for basin development