Hess Midstream LP(US:HESM)2025-11-06 21:18Financial Performance - Total revenues for Q3 2025 reached $420.9 million, a 11.0% increase from $378.5 million in Q3 2024[15] - Net income attributable to Hess Midstream LP for Q3 2025 was $97.7 million, compared to $58.6 million in Q3 2024, representing a 66.7% increase[15] - The company reported a basic net income per Class A share of $0.75 for Q3 2025, up from $0.63 in Q3 2024, marking a 19.0% increase[15] - Net income for the nine months ended September 30, 2025, was $516.6 million, an increase of 6.3% compared to $486.9 million in 2024[22] - Consolidated net income for Q3 2025 was $175.5 million, with net income attributable to Hess Midstream LP at $97.7 million, or $0.75 basic earnings per Class A Share[127] - Revenues for the three months ended September 30, 2025, increased to $420.9 million, up from $378.5 million in the same period of 2024, representing an increase of 11.4%[96] - Adjusted EBITDA for the nine months ended September 30, 2025, reached $936.7 million, compared to $844.2 million for the same period in 2024, reflecting a growth of 10.9%[98] - Adjusted EBITDA for Q3 2025 was $320.7 million, an increase of $33.8 million compared to Q3 2024[129] Assets and Liabilities - Total assets as of September 30, 2025, were $4,437.7 million, up from $4,151.0 million as of December 31, 2024, reflecting a 6.9% growth[11] - Long-term debt as of September 30, 2025, was $3,764.9 million, up from $3,449.4 million as of December 31, 2024, reflecting an increase of 9.1%[11] - Total liabilities increased to $4,011.2 million as of September 30, 2025, from $3,685.7 million as of December 31, 2024, representing an increase of 8.8%[11] - Total current assets increased to $168.2 million as of September 30, 2025, compared to $149.4 million as of December 31, 2024, a growth of 12.5%[11] - Total debt as of September 30, 2025, had a carrying value of $3,794.9 million and a fair value of approximately $3,840.1 million[81] Cash Flow and Expenses - Net cash provided by operating activities increased to $738.2 million, up from $681.8 million, reflecting a growth of 8.3%[22] - Operating and maintenance expenses for Q3 2025 were $98.1 million, an increase from $89.0 million in Q3 2024, indicating a 10.2% rise[15] - Interest expense, net, for the nine months ended September 30, 2025, was $168.9 million, compared to $150.0 million for the same period in 2024, reflecting an increase of 12.6%[98] - The company reported depreciation expense of $159.9 million, an increase of 5.3% from $151.8 million in 2024[22] - Total operating costs and expenses in Q3 2025 were $162.0 million, up from $146.8 million in the prior-year quarter, primarily due to higher employee costs and depreciation[129] Shareholder Activities - The company declared a quarterly cash distribution of $0.7548 per Class A Share for the quarter ended September 30, 2025, an increase of $0.0178 per share compared to the previous quarter[102] - The company repurchased 5,151,842 Class B Units for approximately $190.0 million on May 9, 2025[47] - In Q2 2025, the company repurchased $10.0 million of Class A Shares, receiving 267,532 shares[50] - In Q3 2025, the company repurchased $70.0 million of Class A Shares, receiving 1,706,118 shares[51] - The company incurred approximately $2.9 million in costs related to the repurchase transactions during the nine months ended September 30, 2025, compared to $2.4 million in the same period of 2024[55] Mergers and Acquisitions - The company completed a merger with Chevron on July 18, 2025, resulting in Chevron becoming the direct parent of Hess[31] - The successful integration of Hess' business following the Merger is critical for realizing anticipated benefits and synergies, which may impact financial results[218] - The Merger, completed in July 2025, may disrupt current plans or operations and affect employee retention, potentially impacting financial performance[219] Market and Operational Insights - Revenues from fee-based commercial agreements with Chevron for the three and nine months ended September 30, 2025, were 96% and 97%, respectively, compared to 98% for the same periods in 2024[63] - The company generates substantially all revenues through long-term commercial agreements with Chevron, minimizing direct exposure to commodity price fluctuations[209] - The markets for oil and natural gas are expected to remain volatile, which could impact production rates and investments by the company and its partners[178][179] - The company operates in three reportable segments: gathering, processing and storage, and terminaling and export, evaluated based on Adjusted EBITDA[93] Debt and Financing - The Partnership issued $800.0 million of 5.875% fixed-rate senior unsecured notes due 2028, redeeming the previous 5.625% notes due 2026, resulting in an extinguishment loss of approximately $2.0 million[74] - The Partnership received an investment grade rating of 'BBB-' from S&P Global Ratings on July 24, 2025, allowing for more flexible debt covenants[75] - As of September 30, 2025, the Partnership had $1.4 billion in senior unsecured credit facilities, with $356.0 million drawn from the revolving credit facility and $370.0 million from the Term Loan A facility[79] - A 15% increase or decrease in interest rates would affect the fair value of fixed-rate debt by approximately $75.4 million or $71.9 million, respectively[211] Risks and Controls - There were no changes in internal control over financial reporting that materially affected the company's controls as of September 30, 2025[213] - The company has not implemented any derivative instruments to hedge interest rate exposure as of September 30, 2025[210] - Risks associated with the Merger include potential operational challenges and unforeseen expenses that could adversely affect financial results and share prices[218]