Hess Midstream LP Announces 2021 Guidance

Rhea-AI Summary

Hess Midstream LP (NYSE: HESM) has outlined its 2021 financial guidance and capital budget. The company anticipates full-year net income between $590 million and $620 million, with Adjusted EBITDA expected between $860 million and $890 million. Distributable Cash Flow is projected to range from $750 million to $780 million, resulting in a coverage ratio of at least 1.4x. Hess Midstream expects to generate Adjusted Free Cash Flow between $610 million and $640 million and plans to grow distributions by at least 5%. Average gas gathering volumes are projected at 285 to 295 MMcf/d.

Positive

• Projected net income for 2021 between $590 million and $620 million.
• Adjusted EBITDA guidance between $860 million and $890 million.
• Distributable Cash Flow expected at $750 million to $780 million with a coverage ratio of at least 1.4x.
• Estimated Adjusted Free Cash Flow between $610 million and $640 million.
• Targeted distribution growth of at least 5% per annum.

Negative

• Reduced gas gathering and processing volumes due to planned Tioga Gas Plant turnaround, anticipating a 30 MMcf/d drop.
• Third parties make up only 10% of total gas and 15% of total crude oil throughput volumes.

Hess Midstream LP (NYSE: HESM) (“Hess Midstream”) today provided 2021 guidance and announced its 2021 capital budget.

John Gatling, President and Chief Operating Officer of Hess Midstream said, “We enter 2021 with Hess planning to add a rig in the Bakken and our plans to further enhance our gas capture capability, driving future growth for Hess Midstream. We are in a unique position with visible growth, excess cash flow and a contract structure that generates 100% fee-based revenues with downside protection through 2033.”

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1 Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow are non-GAAP measures. Adjusted Free Cash Flow reported in this release reflects Hess Midstream’s new definition of Adjusted Free Cash Flow of Distributable Cash Flow less expansion capital expenditures and ongoing contributions to equity investments, which is calculated in a manner consistent with similar measures used by other publicly traded midstream energy companies. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the following pages of this release.

Full Year 2021 Guidance

Hess Midstream financial guidance incorporates the outcomes of the year-end tariff rate recalculation and nomination process conducted with Hess Corporation (“Hess”) under Hess Midstream’s commercial agreements with Hess.

Hess Midstream expects full year 2021 net income of between $590 million and $620 million and Adjusted EBITDA of between $860 million and $890 million. Hess Midstream expects full year 2021 Distributable Cash Flow to range between $750 million and $780 million, resulting in a distribution coverage ratio of at least 1.4x.

In 2021, Hess Midstream expects to generate Adjusted Free Cash Flow of between $610 million and $640 million and approximately $100 million, after funding distributions that are targeted to grow at least 5% per annum on a distribution per share basis. In addition, Hess Midstream expects leverage to be approximately 2x Adjusted EBITDA on a full year basis providing capital allocation flexibility.

Full year 2021 financial guidance includes approximately 95% minimum volume commitment revenue, as Hess Midstream’s physical volumes are generally expected to be at or below minimum volume commitment levels.

In 2021, full year gas gathering volumes are anticipated to average 285 to 295 MMcf/d and gas processing volumes are expected to average 270 to 280 MMcf/d. Gas gathering and gas processing throughput volumes in 2021 guidance each reflect an approximate 30 MMcf/d reduction due to the planned Tioga Gas Plant turnaround in the third quarter.

Crude oil gathering volumes are anticipated to average 110 to 120 MBbl/d in 2021, and crude oil terminaling volumes are expected to average 120 to 130 MBbl/d, supported by Hess’ announced plan to add an additional rig in the Bakken by the end of the first quarter.

Water gathering volumes are expected to average 60 to 70 MBbl/d for full year 2021.

Third parties are expected to comprise approximately 10% of total gas and 15% of total crude oil throughput volumes for 2021.

Full Year 2021 Capital Guidance

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FAQ

What is Hess Midstream's projected net income for 2021?

Hess Midstream projects a net income between $590 million and $620 million for 2021.

What are the Adjusted EBITDA expectations for Hess Midstream in 2021?

The company expects Adjusted EBITDA to range from $860 million to $890 million for 2021.

What is the expected Distributable Cash Flow for HESM in 2021?

Distributable Cash Flow for 2021 is projected to be between $750 million and $780 million.

When will Hess Midstream's distribution increase occur?

Hess Midstream targets distribution growth of at least 5% per annum.

What impact will the Tioga Gas Plant turnaround have on Hess Midstream's volumes?

The turnaround is expected to reduce gas gathering and processing volumes by approximately 30 MMcf/d.