Hess Midstream LP Q1 FY2026 earnings call

In the first quarter, continued to execute operational priorities and financial strategy. Completed an accretive $60 million share and unit repurchase. Increased distribution 2%. First quarter capital expenditures were $10 million. Reduced 2026 estimated capital expenditure by a third to approximately $100 million due to Chevron's move to longer laterals. Increased 2026 adjusted free cash flow guidance to $910 to $960 million.

During the first quarter, throughput volumes averaged 430 million cubic feet per day for gas processing, 119,000 barrels of oil per day for crude terminaling, and 115,000 barrels of water per day for water gathering. Total revenues, including pass-through revenues, decreased by approximately $15 million, resulting in segment revenue changes as follows: Gathering revenues decreased by approximately $14 million. Processing revenues decreased by approximately $6 million, while terminaling revenues increased by approximately $5 million. Adjusted EBITDA for the first quarter of 2026 was $300 million, and our gross adjusted EBITDA margin for the first quarter was maintained at approximately 83%.

For the second quarter of 2026, net income expected to be approximately $150 million to $160 million and adjusted EBITDA to be approximately flat with the first quarter at $295 million to $305 million. For the full year 2026, net income expected between $650 million and $700 million, and adjusted EBITDA between $1,225,000,000 and $1,275,000,000. 2026 capital expenditures expected approximately $105,000,000. Adjusted free cash flow expected between $910,000,000 and $960,000,000. No material cash taxes expected until after 2028.

Today's conference call contains projections and other forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ. These risks include those set forth in the risk factor section of HES Midstream's filings with the SEC.

Q: Just wanted to zoom in a bit more on the change to CapEx here and what this means for WellConnect slash turn in line activity for the year and whether there are any read throughs or changes to growth expectations for year end or into 2027 that we can derive from this.

A: If you look at what's been happening with CapEx for us really since the end of last year, we've really been reducing capex as we are approaching the end of our infrastructure build-out...

Q: Last call, you guys spent some time talking about a little bit of the evolution on the balance sheet side, thinking about lower leverage over time. I'm just wondering, we're a quarter later now. If you've had some time to kind of refine that and if you have a kind of longer term leverage target you want to put out there relative to the kind of distribution growth and maybe some buyback cadence you've talked about?

A: There's no change really to our return of capital approach...

Q: I just wanted to pick up on the second quarter guidance you gave here. I think my math, just looking at the full year midpoint, implies something around 8% growth in the second half of the year. Can you maybe just talk about some of the drivers you see contributing to that growth in the second half and where there might be some risks to the upside or downside from here?

A: On the volume side, really, as we said, Q1 is I'd say really the low point in terms of volume, we do have planned maintenance in TGP in the second quarter...

Q: Beyond the drilling and completion efficiencies that Chevron has highlighted in the Bakken, are there any other longer-term costs or structural opportunities or changes that you and Chevron are working towards that could show up in your business, maybe put differently, you know, as your capital intensity comes down, are there scenarios where some of those savings kind of flow back to Chevron through alternative commercial structures or anything like that?

A: In terms of efficiencies and optimization, those are all really win-wins...