Hess Midstream’s Earnings Call Highlights Growth and Optimism

Hess Midstream Partners Lp ((HESM)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Hess Midstream Partners LP painted a picture of robust financial health and operational success. The sentiment throughout the call was largely positive, with the company highlighting significant growth in throughput and EBITDA. Shareholder returns and financial flexibility were key achievements, although there were challenges such as increased maintenance costs and additional interest and tax expenses. Despite these hurdles, the overall sentiment was optimistic, with the highlights outweighing the lowlights.

Increased Throughput and Operational Performance

The company reported a notable increase in throughput across all segments, with a 10% growth expected in oil and gas systems in 2025 compared to 2024. Hess Midstream achieved record operating performance, processing 449 million cubic feet per day for gas and handling 137,000 barrels of oil per day at their crude terminaling facilities.

Strong Financial Performance

Hess Midstream anticipates an 11% increase in adjusted EBITDA in 2025, with a 7% growth expected in the second half. The company has targeted a 5% annual distribution growth, supported by excess free cash flow. Additionally, S&P upgraded the company’s debt to BBB-, reflecting its strong financial position.

Capital Allocation and Shareholder Returns

Since 2021, Hess Midstream has returned over $2 billion to shareholders. The distribution per Class A share has increased by over 60% since 2021, with a 5% targeted annual distribution growth. The company maintains financial flexibility exceeding $1.25 billion through 2027, earmarked for shareholder returns.

Successful Leadership Transitions

Jonathan Stein and Mike Chadwick have assumed new roles as CEO and CFO, respectively. Their leadership is expected to maintain continuity and a strategic focus, ensuring the company remains on its growth trajectory.

Higher Seasonal Maintenance Costs

The company anticipates higher maintenance activity to partially offset volume growth in the third quarter. Total costs and expenses have increased due to seasonal maintenance, which is a challenge the company is managing.

Increased Interest and Tax Expenses

Hess Midstream updated its full-year guidance to include an additional $15 million in interest and income tax expenses. These increases are attributed to ownership changes and debt balances, which the company is addressing.

Forward-Looking Guidance

During the second quarter of 2025, Hess Midstream provided optimistic guidance, forecasting a 10% year-over-year increase in throughput volumes across all oil and gas systems for 2025. Adjusted EBITDA is expected to grow by around 11%, with a 7% growth at the midpoint in the second half of the year. Capital expenditures are projected to be approximately $300 million, with adjusted free cash flow between $725 million and $775 million. The company also emphasized its significant financial flexibility of over $1.25 billion through 2027, supporting shareholder returns and potential share repurchases.

In conclusion, Hess Midstream Partners LP’s earnings call highlighted a strong financial and operational performance, with a positive outlook for future growth. The company is well-positioned to continue delivering value to shareholders, despite challenges such as increased maintenance and tax expenses. The overall sentiment was optimistic, reflecting confidence in the company’s strategic direction and financial health.