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What were the key takeaways from Hess Midstream's earnings call?

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What factors drove the changes in Hess Midstream's revenue and profit?

- **Operational Excellence**: Q3 volumes up 3% in gas gathering, supporting $321M EBITDA (80% margin). 2025 free cash flow ~$760M.
- **Distribution Growth**: 5% annual Class A share target through 2027, backed by $140M+ annual excess cash flow.
- **CapEx Reduction**: 2026+ CapEx ~$125M+ (vs $250-300M prior), freeing up $140M+ annual free cash flow.
- **Chevron Synergy**: 3-rig program maintains 200,000 BOE/d plateau, driving gas volume growth (~75% of revenue).

**【CEO Summary Section】**
- **Operational Strength**: Q3 2025 throughput volumes averaged 462 MMcf/d gas processing, 130,000 bbl/d oil terminaling, and 137,000 bbl/d water gathering, up 3% QoQ in gas gathering. 
- **Distribution Growth**: Increased distribution by 2.4% (10% annualized) and completed $100M share/unit repurchase. Class A shares target 5% annual distribution growth through 2027.
- **Capital Discipline**: Suspended Capa gas plant project, reducing 2025 CapEx to $270M. 2026+ CapEx expected to be ~$125M+ (vs prior $250-300M guidance), freeing up $140M+ annual excess cash flow.
- **Free Cash Flow**: Q3 adjusted free cash flow $187M, full year ~$760-770M. 2026+ EBITDA expected flat vs 2025, but free cash flow to grow with lower CapEx.

**【CFO Financial Commentary】**
- **Q3 Financials**: Net income $176M, adjusted EBITDA $321M (80% margin). Q4 guidance: net income $170-180M, EBITDA $315-325M. Full year EBITDA ~$1.25B (10% YoY growth).
- **Distribution Policy**: Target 5% annual Class A share growth through 2027. 2025 excess free cash flow ~$140M after distributions. 2026+ financial flexibility for buybacks with leverage at 3x target.
- **Leverage Management**: Revolver balance $356M at quarter end. 2026+ EBITDA flat but free cash flow growth from reduced CapEx.

**【Q&A Key Highlights】**
- **Bakken Trends**: Chevron's 3-rig program supports 200,000 BOE/d plateau. Gas volumes to grow as GORs rise (~75% of revenue). Hess Midstream expects long-term gas-driven growth.
- **2026 Outlook**: EBITDA flat vs 2025 due to lower third-party volumes, but free cash flow to grow with $125M+ CapEx. 2026+ guidance to be released post-December budget.
- **Buyback Cadence**: $100M Q3 repurchase. 2026+ buybacks possible with ~$140M annual excess cash flow and 3x leverage target.
- **Chevron Relationship**: Smooth integration, 2 distribution increases approved. Chevron's focus on efficiency (longer laterals) supports Hess Midstream's capital framework.

Hess Midstream LP (HESM) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

HESM

HESM fundamentals

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