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Overview of Hess Midstream LP
Hess Midstream LP (NYSE: HESM) is a Houston, Texas-based midstream energy company that plays a critical role in the oil and gas supply chain. Established in 2014, the company specializes in owning, operating, developing, and acquiring midstream assets that support the transportation, processing, and storage of hydrocarbons. Its operations are structured into three key segments: gathering, processing and storage, and terminaling and exporting. Hess Midstream LP provides fee-based services to its parent company, Hess Corporation, as well as third-party energy producers, ensuring stable and predictable revenue streams.
Core Business Segments
- Gathering: The gathering segment is the company's largest revenue driver. It includes natural gas gathering and compression, crude oil gathering, and produced water gathering and disposal. These services are essential for transporting raw hydrocarbons from production sites to processing facilities efficiently and safely.
- Processing and Storage: This segment focuses on processing natural gas and fractionating natural gas liquids (NGLs). The company also provides storage solutions for crude oil and NGLs, ensuring energy producers have the infrastructure needed to manage supply and demand fluctuations effectively.
- Terminaling and Exporting: Hess Midstream facilitates the terminaling, loading, and exporting of crude oil and NGLs. This includes railcar transportation and propane storage and terminaling, enabling efficient delivery to downstream markets.
Business Model and Revenue Generation
Hess Midstream LP operates under a fee-based business model, which insulates it from commodity price volatility. By charging fixed fees for its services, the company ensures steady cash flows, making it an attractive option for energy producers seeking reliable midstream solutions. Its strategic partnership with Hess Corporation provides a stable customer base, while its ability to serve third-party clients enhances diversification and growth opportunities.
Market Position and Competitive Landscape
Operating within the midstream sector of the oil and gas industry, Hess Midstream LP competes with other infrastructure providers. However, its integrated asset base, which includes gathering systems, processing plants, and terminaling facilities, positions it as a comprehensive solution for energy logistics. The company's relationship with Hess Corporation further strengthens its market position by ensuring a consistent flow of hydrocarbons through its infrastructure.
Strategic Significance
Hess Midstream LP plays a vital role in the energy value chain by providing the infrastructure necessary for the efficient movement of hydrocarbons from production to market. Its operations support the reliability and efficiency of energy producers, contributing to the overall stability of the energy supply chain. With a focus on operational excellence and customer service, the company is well-regarded for its expertise in midstream operations.
Conclusion
In summary, Hess Midstream LP is a key player in the midstream energy sector, offering a diversified portfolio of services that enable the efficient transportation, processing, and storage of hydrocarbons. Its fee-based business model, integrated asset base, and strategic partnership with Hess Corporation make it a cornerstone of the energy supply chain. By focusing on operational reliability and customer satisfaction, Hess Midstream LP continues to provide critical infrastructure solutions to energy producers across the United States.
Hess Midstream LP (NYSE: HESM) announced a $400 million repurchase of Class B units from Hess Corporation and Global Infrastructure Partners. The Board of Directors approved the transaction to enhance shareholder returns and improve capital structure, targeting a 3.0x Debt/Adjusted EBITDA ratio for 2022. This move is expected to increase distributable cash flow per unit and facilitate growth above the 5% annual distribution target. Funded through debt financing, the repurchase will close concurrently with a $250 million secondary public offering.
Hess Midstream LP (NYSE: HESM) has initiated an underwritten public offering of 7,900,000 Class A shares, representing limited partner interests, by subsidiaries of Hess Corporation and Global Infrastructure Partners. The underwriters also have an option to purchase an additional 1,185,000 shares within 30 days. Importantly, HESM will not receive any proceeds from this offering. Citigroup and Goldman Sachs are the joint bookrunning managers for the offering, which is conducted under an effective shelf registration statement. More details are available in the SEC filing.
Hess Midstream LP (NYSE: HESM) has filed its annual report on Form 10-K for the fiscal year ending December 31, 2021, with the SEC on March 1, 2022. The report is available on Hess Midstream’s website, which includes fully audited financial statements. Hess Midstream operates a diverse range of midstream assets primarily in the Bakken and Three Forks Shale plays located in the Williston Basin of North Dakota, offering services to Hess Corporation and other third-party customers.
Hess Midstream LP (NYSE: HESM) reaffirmed its Q1 and full-year 2022 guidance, projecting nearly 95% minimum volume commitment revenue. Throughput volume expectations and adjusted EBITDA for Q1 are set between $235-$245 million, with full-year adjusted EBITDA at $970-$1,000 million. Net income is anticipated to be $150-$160 million for Q1 and $630-$660 million for FY 2022. The company targets 5% annual distribution growth through 2024, supported by a distribution coverage ratio exceeding 1.4x, enhancing capital flexibility.
Hess Midstream LP (NYSE: HESM) announced participation in the Credit Suisse Annual Energy Summit on February 28, 2022, and the Morgan Stanley Energy & Power Conference on March 2, 2022. The company has made a presentation available on its website to provide insights to investors. Hess Midstream focuses on midstream assets associated with oil, gas, and produced water handling, primarily in North Dakota's Bakken and Three Forks Shale plays. For more information, visit www.hessmidstream.com.
Hess Midstream LP (NYSE: HESM) announced that President John Gatling and CFO Jonathan Stein will join a fireside chat co-hosted by Morgan Stanley and Alerian on February 24, 2022, at 2:00 PM ET. Investors can access a presentation in the 'Investors' section of the Hess Midstream website. Hess Midstream specializes in fee-based, growth-oriented midstream services, primarily focusing on oil, gas, and water handling assets in the Bakken and Three Forks shale plays in North Dakota.
Hess Midstream LP reported a robust fourth quarter of 2021 with a net income of $165.1 million, up from $132.3 million year-over-year. Adjusted EBITDA reached $246.6 million, and Distributable Cash Flow was $215.0 million, yielding a distribution coverage ratio of approximately 1.6x. For 2022, the company projects a net income between $630-$660 million and plans $235 million in capital expenditures focused on gas compression capacity. The board declared a quarterly cash distribution of $0.5167 per Class A share, a 1.2% increase from the prior quarter.
Hess Midstream LP (NYSE: HESM) has provided guidance for 2022, projecting net income between $630 million and $660 million, with Adjusted EBITDA expected between $970 million and $1,000 million. The company anticipates Distributable Cash Flow will be in the range of $840 million to $870 million, resulting in a distribution coverage ratio over 1.5x. 2022 capital expenditures are planned at approximately $235 million, focused on expanding gas compression capacity. The company expects to maintain a 5% annual distribution growth through 2024.
Hess Midstream LP (NYSE: HESM) announced a quarterly cash distribution of
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