Hess Midstream Partners Lp Representing Limited Partner Interests Stock Earnings Reports

Summary of Key Points from Hess Midstream Q1 2025 Earnings Call:

Operational Performance:

• Hess Midstream reported strong operational performance in Q1 despite severe winter weather challenges.
• Throughput volumes averaged:
  • 424 million cubic feet per day (MMcf/d) for gas processing
  • 125,000 barrels per day (bpd) for crude terminaling
  • 126,000 bpd for water gathering
• Bakken production levels were affected by weather, but recovery is anticipated with Hess projecting production to rise to 210,000-215,000 boe/d in Q2.

Financial Highlights:

• Q1 net income was $161 million, down from $172 million in Q4 2024.
• Adjusted EBITDA was $292 million in Q1 versus $298 million in Q4 2024, primarily due to lower throughput volumes from weather impacts.
• The company maintained its 80% gross adjusted EBITDA margin, above the target of 75%.
• Capital expenditures for the quarter were approximately $50 million, with a full year projection of $300 million.

Guidance and Growth Outlook:

• For Q2, net income is expected to be between $170 million to $180 million with adjusted EBITDA around $300 million to $310 million.
• The full-year guidance for 2025 is reaffirmed, with expected net income of $715 million to $765 million and EBITDA of $1,235 million to $1,285 million.
• The company is targeting at least a 5% annual growth in distributions per Class A share through 2027, supported by existing minimum volume commitments (MVCs).

Capital Return Strategy:

• Since early 2021, Hess Midstream has returned $1.95 billion to shareholders through share repurchases and has increased distributions per Class A share by about 57%.
• A total of approximately $1.25 billion in financial flexibility is anticipated through 2027 for shareholder returns, which includes potential for multiple unit repurchases annually.

Market Conditions and Competitive Positioning:

• Hess Midstream operates in a stable framework due to contracts with no direct commodity price exposure, which insulates them from short-term volatility.
• A significant focus on maintaining operational reliability and capturing growth in throughput volumes from both Hess and third-party productions.
• Hess Midstream views the Bakken basin as a long-term growth opportunity despite current macroeconomic volatility.

Additional Insights:

• Hess plans to continue a four-rig drilling program throughout 2025, anticipating steady production support.
• The company's leverage remains low at approximately 3.1 times adjusted EBITDA, enabling strategic capital allocation even if conditions necessitate temporary adjustments.
• Concerns regarding the rig count reductions in response to oil price fluctuations have been addressed with continued support for growth in both oil and gas production.

Conclusion:

Hess Midstream demonstrated robust financial and operational strength in Q1 2025, with a clear strategy for growth and shareholder returns, despite challenging external conditions. The outlook for the remainder of 2025 appears positive, with reaffirmed guidance and continued focus on disciplined investments and capital returns. Investors should note the strong track record of stability and strategic planning as key points of consideration.