Hess Midstream 2025 Q2 Earnings Net Income Surges 12.1%

Hess Midstream (HESM) reported fiscal 2025 Q2 earnings on August 7, 2025, beating expectations with strong revenue and earnings growth. The company delivered a 13.4% year-over-year revenue increase and a 12.1% rise in net income, while also raising its quarterly distribution by 4%. Results were supported by higher throughput volumes across key operations and a recent investment grade credit rating upgrade.

Revenue
Hess Midstream’s total revenue rose to $413.50 million in 2025 Q2, up from $364.60 million in the prior year period. This growth was driven by across-the-board increases in service segments. Oil and gas gathering services generated $185.90 million, while processing and storage services added $152.30 million. Terminaling and export services contributed $33.10 million, and water gathering and disposal services totaled $34.00 million. Additional income came from third-party services ($8.20 million) and other revenue streams ($700,000), resulting in total reported revenues of $414.20 million.

Earnings/Net Income
The company’s earnings per share (EPS) increased 25.4% year-over-year to $0.74 in 2025 Q2 from $0.59 in the same period in 2024. Net income also rose by 12.1% to $179.70 million, compared to $160.30 million in 2024 Q2. These results reflect Hess Midstream’s sustained profitability for six consecutive years, demonstrating strong operational performance and financial discipline. The strong EPS performance underscores the company’s ability to generate consistent returns for shareholders.

Price Action
Despite the positive earnings, the stock price of Hess Midstream experienced mixed short-term price action. Shares declined 1.28% in the latest trading day and 2.09% during the most recent full trading week. However, the stock posted a notable 10.47% gain on a month-to-date basis.

Post-Earnings Price Action Review
Following the earnings report, a strategy of buying HESM after it beat earnings expectations and holding for 30 days yielded a 11.90% return. However, this was below the benchmark return of 66.40%, resulting in an excess return of -54.49%. The strategy showed a maximum drawdown of 0.00%, a Sharpe ratio of 0.27, and a volatility of 9.42%, suggesting moderate risk-adjusted returns.

CEO Commentary
Jonathan Stein, Chief Executive Officer of Hess Midstream, emphasized the importance of its recent repurchase transactions as a key part of the company’s capital allocation strategy. These repurchases, which include Sponsor Class B units and Class A shares, align with the company’s objective of maximizing shareholder returns. Stein expressed confidence in the company’s financial flexibility, noting that over $1.25 billion remains available through 2027 for further returns, including potential additional repurchases. He underscored the strategic value of these actions in driving long-term value for stakeholders.

Guidance
Hess Midstream expects to continue its capital return framework over the next three years, with the potential for further repurchase activity. The repurchased securities will be canceled, leading to increased distributable cash flow per Class A share. The company anticipates that the unit repurchase will close on August 8, 2025, with the final settlement of the ASR share repurchase expected in September 2025.

Additional News
Recent developments highlight Hess Midstream’s strategic and financial progress. The company achieved a significant milestone with the attainment of an S&P 'BBB-' investment grade credit rating on July 24, 2025. This upgrade reduces borrowing costs by lowering interest rate margins on its Term Loan A and revolving credit facility, while also relaxing certain debt covenants. This provides greater flexibility for capital allocation, which is particularly relevant given the $300 million in debt-funded repurchases executed in the first half of 2025.

Another major development was the completion of the Chevron-Hess merger on July 18, 2025. This merger, which transfers control of the general partner to Chevron, could lead to greater strategic alignment and long-term investment in the Bakken region. Additionally, GIP’s full divestment on May 30, 2025, further consolidates Chevron’s indirect interest in the partnership to 37.8%.

Looking ahead, Hess Midstream will need to navigate the implications of its new inflation-based fee structure, which caps most commercial agreements at an annual 3% growth rate. While this structure provides stable, predictable revenue, it may limit upside potential if operating costs or demand increase beyond this cap. Investors are also watching closely how the company will allocate its capital post-investment grade, particularly in the context of its recent financial flexibility.