Hess Midstream's Q1 2025: Key Contradictions in Rig Activity, Financial Flexibility, and Forward Guidance
Friday, May 9, 2025 3:40 am ET
2min read Rig activity and plan, financial flexibility and cash flow, Bakken basin activity and rig count, 2025 guidance and forward guidance are the key contradictions discussed in Hess Midstream's latest 2025Q1 earnings call.
Operational Performance in Challenging Weather:
- Hess Midstream delivered strong operating and financial performance in Q1 despite challenging weather conditions.
- Throughput volumes averaged 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering.
- The performance was impact by severe winter weather in January and February, but a recovery was observed in March.
Bakken Production and Growth Outlook:
- Hess Midstream's throughput volumes were down compared to Q4, reflecting lower production from Hess due to severe winter weather.
- However, throughput volumes are expected to increase in the future, with Bakken net production projected to be in the range of 210,000 to 215,000 barrels of oil equivalent per day in the second quarter.
- The growth is supported by Hess' planned 4-rig drilling program and higher third-party oil volumes.
Financial Strategy and Shareholder Returns:
- Hess Midstream continues its financial strategy of prioritizing shareholder returns, having returned $1.95 billion to shareholders through accretive repurchases since 2021.
- The distribution per Class A share has increased by approximately 57% since 2021, with a 5% targeted annual distribution growth.
- The company's low leverage ratio of approximately 3.1x adjusted EBITDA allows for significant shareholder returns while maintaining balance sheet strength.
Capital Expenditure and Multi-year Projects:
- Hess Midstream's capital expenditures for 2025 are expected to total approximately $300 million, with completion of new compressor stations and associated gathering systems as key projects.
- The company is focused on disciplined low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance.
- The projects align with Hess Midstream's strategy to generate sustainable cash flow and create opportunities for additional capital returns to shareholders.
Operational Performance in Challenging Weather:
- Hess Midstream delivered strong operating and financial performance in Q1 despite challenging weather conditions.
- Throughput volumes averaged 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering.
- The performance was impact by severe winter weather in January and February, but a recovery was observed in March.
Bakken Production and Growth Outlook:
- Hess Midstream's throughput volumes were down compared to Q4, reflecting lower production from Hess due to severe winter weather.
- However, throughput volumes are expected to increase in the future, with Bakken net production projected to be in the range of 210,000 to 215,000 barrels of oil equivalent per day in the second quarter.
- The growth is supported by Hess' planned 4-rig drilling program and higher third-party oil volumes.
Financial Strategy and Shareholder Returns:
- Hess Midstream continues its financial strategy of prioritizing shareholder returns, having returned $1.95 billion to shareholders through accretive repurchases since 2021.
- The distribution per Class A share has increased by approximately 57% since 2021, with a 5% targeted annual distribution growth.
- The company's low leverage ratio of approximately 3.1x adjusted EBITDA allows for significant shareholder returns while maintaining balance sheet strength.
Capital Expenditure and Multi-year Projects:
- Hess Midstream's capital expenditures for 2025 are expected to total approximately $300 million, with completion of new compressor stations and associated gathering systems as key projects.
- The company is focused on disciplined low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance.
- The projects align with Hess Midstream's strategy to generate sustainable cash flow and create opportunities for additional capital returns to shareholders.
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