Core Viewpoint - Hess Midstream LP has filed its annual report on Form 10-K for the fiscal year ended December 31, 2025, with the SEC, highlighting its financial performance and operational updates [1]. Group 1: Company Overview - Hess Midstream is a fee-based, growth-oriented midstream company that owns, operates, develops, and acquires a diverse set of midstream assets [2]. - The company provides services primarily to Chevron and its subsidiaries, as well as third-party customers [2]. - Hess Midstream's assets include oil, gas, and produced water handling facilities, mainly located in the Bakken and Three Forks Shale plays in the Williston Basin area of North Dakota [2]. Group 2: Financial Reporting - The annual report on Form 10-K includes complete audited financial statements of Hess Midstream [1]. - Shareholders can request printed copies of the annual report free of charge by contacting Investor Relations [1].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Hess Midstream LP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 1400 Smith Street 77002 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission ...

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Core Insights - The article discusses the growing recognition and stability of master limited partnerships (MLPs), particularly highlighting the Alerian MLP ETF (AMLP) as a strong investment choice in a volatile market [2][3]. Group 1: MLPs and Market Position - MLPs have evolved from being relatively unknown to gaining significant investor recognition, with AMLP being a notable example [2]. - The underlying businesses of MLPs operate like essential infrastructure, focusing on pipelines and storage facilities, which are critical to the U.S. economy [3]. Group 2: Business Model and Stability - AMLP's stability is attributed to its fee-based business model, which charges a flat fee for the transportation of oil and gas, making it less sensitive to fluctuations in energy prices [4]. - The ETF has maintained a streak of 61 consecutive quarters of payouts, providing steady income that acts as a buffer during market volatility [5]. Group 3: Industry Dynamics - A significant driver for MLPs in 2026 is the surge in data-center construction, with long-term contracts being signed to transport natural gas for these facilities [5]. - AMLP consists of a concentrated portfolio with only 15 holdings, where the top seven companies represent a majority of the assets under management [6]. Group 4: Risk and Volatility - MLPs, particularly AMLP, offer a unique hedge against market volatility, with a beta of 0.7x, indicating it is historically 30% less volatile than the S&P 500 Index [8].

Core Viewpoint - Investors in Hess Midstream LP (HESM) should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the Feb. 2, 2026 $43 Put option [1] Group 1: Implied Volatility - Implied volatility indicates the market's expectations for future price movements, with high levels suggesting anticipation of significant price changes or upcoming events that could lead to a rally or sell-off [2] - Options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4] Group 2: Analyst Sentiment - Hess Midstream currently holds a Zacks Rank 3 (Hold) in the Energy and Pipeline - Master Limited Partnerships industry, which is in the top 39% of the Zacks Industry Rank [3] - Over the past 60 days, two analysts have raised their earnings estimates for the current quarter, while none have lowered them, resulting in a slight decrease in the Zacks Consensus Estimate from 68 cents to 65 cents per share [3]

Core Insights - Hess Midstream LP (NYSE:HESM) is a significant player in the midstream energy sector, focusing on the processing, storage, and transportation of natural gas and crude oil, primarily in the United States [1] Financial Performance - For the fourth quarter of 2025, HESM reported earnings per share (EPS) of $0.72, slightly below the estimated $0.723, but an increase from $0.68 in the same quarter of 2024, indicating growth in profitability [2][6] - The company's revenue for the quarter was approximately $404.2 million, missing the estimated $419.2 million, which raises concerns about meeting market expectations [3][6] - HESM's net income for the quarter was $168 million, a slight decrease from $172.1 million in the previous year, indicating some pressure on profitability [3] Financial Ratios - HESM has a price-to-earnings (P/E) ratio of 13.81, a price-to-sales ratio of 4.56, and an enterprise value to sales ratio of 6.91, reflecting the market's valuation of its earnings and revenue [4] - The enterprise value to operating cash flow ratio is 11.17, indicating the relationship between the company's value and its cash flow from operations [4] Financial Health - The company has a high debt-to-equity ratio of 6.63, indicating significant reliance on debt financing, which could pose risks if financial challenges arise [5][6] - HESM's current ratio is 0.75, suggesting potential liquidity issues as it may struggle to cover short-term liabilities with current assets [5][6] - Despite these challenges, the earnings yield stands at 7.24%, offering a decent return on investment for shareholders [5]

Financial Performance - Hess Midstream LP reported fourth-quarter 2025 earnings per share of $0.72, meeting analyst expectations, while revenue was $404.2 million, falling short of the forecast of $417.05 million [1] - The net income for the quarter totaled $168.0 million, with $93.3 million attributable to Hess Midstream LP [2] - Adjusted EBITDA reached $309.1 million, and adjusted free cash flow totaled $207.8 million, indicating resilient financial performance despite lower throughput volumes [2] Operational Metrics - Throughput volumes declined year over year across all segments: oil terminaling volumes decreased by 4%, gas processing by 1%, and water gathering by 5% [3] - The declines in throughput were primarily attributed to reduced production caused by severe winter weather [3] - Capital expenditures for the quarter totaled $47.6 million, down 44% from the prior-year period, reflecting the completion of gas compression expansion projects [3]

Core Insights - Hess Midstream reported a decrease in costs and expenses by approximately $7 million, attributed to lower allocations and seasonal maintenance activity, while the gross adjusted EBITDA margin remained strong at around 83% [1] - The company experienced a decline in total revenues by about $19 million, primarily due to severe winter weather and lower third-party volumes [1] - For full-year 2025, net income was approximately $685 million, with adjusted EBITDA increasing by about 9% from 2024 [2] Financial Performance - In Q4 2025, net income was $168 million, down from approximately $176 million in Q3, while adjusted EBITDA was $309 million compared to approximately $321 million in Q3 [2] - Full-year 2025 adjusted EBITDA was reported at $1,238 million, with average volumes for gas processing at 445 million cubic feet per day, crude terminaling at 129,000 barrels per day, and water gathering at 131,000 barrels per day [3] Capital Expenditures - The company is entering a period of significantly lower capital spending, with 2026 capital expenditures expected to be around $150 million, a reduction of approximately 40% compared to 2025 [5] - Q4 2025 capital expenditures were approximately $47 million, reflecting lower activity and completion of the compression buildout [6] - Future capital spending is projected to decline further to less than $75 million per year in 2027 and 2028 [7] Volume and Revenue Guidance - Management expects first-quarter 2026 volumes to be lower due to ongoing severe winter weather, but anticipates seasonal volume growth throughout the year [9] - For full-year 2026, net income guidance is set at $650 million to $700 million, with adjusted EBITDA expected to be flat at the midpoint compared to 2025 [11] - Approximately 95% of 2026 revenues are covered by minimum volume commitments (MVCs), providing significant revenue protection [11] Free Cash Flow and Shareholder Returns - The company targets a gross adjusted EBITDA margin of approximately 75% in 2026 and expects to generate adjusted free cash flow of $850 million to $900 million [12] - After funding a targeted 5% annual distribution growth, the company anticipates excess adjusted free cash flow of about $210 million for shareholder returns and debt repayment [12] - Long-term projections through 2028 indicate a 5% annualized growth in net income and adjusted EBITDA, supported by gas volume growth and lower operating costs [13] Operational Efficiency - Integration with Chevron has optimized midstream and upstream investments, reducing the need for overbuilding and capital expenditures [8] - The company is focused on maintaining a leverage ratio below 3x as EBITDA grows, with a conservative approach to funding shareholder returns from free cash flow [15]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported net income of approximately $685 million and Adjusted EBITDA of $1,238 million, representing a growth of approximately 9% from 2024 [10] - In the fourth quarter, net income was $168 million compared to approximately $176 million in the third quarter, and Adjusted EBITDA was $309 million compared with approximately $321 million in the third quarter [10][11] - The gross Adjusted EBITDA margin for the fourth quarter was maintained at approximately 83%, above the target of 75% [11] Business Line Data and Key Metrics Changes - Fourth quarter gas processing volumes averaged 444 million cubic feet per day, crude terminaling volumes averaged 122,000 barrels of oil per day, and water gathering volumes averaged 124,000 barrels of water per day [5] - For the full year 2025, gas processing volumes averaged 445 million cubic feet per day, crude terminaling volumes averaged 129,000 barrels of oil per day, and water gathering volumes averaged 131,000 barrels of water per day [6] Market Data and Key Metrics Changes - The company expects lower volumes across its systems in the first quarter of 2026 due to severe winter weather, with a recovery anticipated as weather improves [7][41] - Approximately 95% of revenues are protected by minimum volume commitments (MVCs) for the full year 2026, providing a safety net against volume fluctuations [8][14] Company Strategy and Development Direction - The company plans to reduce capital spending significantly, expecting to spend approximately $150 million in 2026, a 40% reduction from 2025, and further decrease to less than $75 million per year in 2027 and 2028 [4][15] - The strategy includes a targeted 5% distribution growth per Class A share through 2028, supported by significant free cash flow generation [5][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the severe winter weather has impacted operations but expects a recovery in production as conditions improve [41] - The company reiterated its guidance for net income and Adjusted EBITDA growth through 2028, driven by gas volume growth and lower capital expenditures [8][29] Other Important Information - The company had a drawn balance of $338 million on its revolving credit facility at year-end [12] - Adjusted free cash flow for the first quarter of 2026 is expected to increase relative to the fourth quarter of 2025 due to lower capital expenditures [12] Q&A Session Summary Question: Balance sheet and debt repayment strategy - Management indicated that a portion of free cash flow will be used for debt repayment, with a conservative financial strategy in line with volume profiles [17][19] Question: Third-party outlook and Chevron's production target - Management expects no change in third-party volumes, maintaining an average of 10% across oil and gas, and confirmed Chevron's target of 200,000 barrels of oil equivalent per day remains intact [21][23] Question: Growth drivers and cost-cutting impact - Future growth is driven by inflation escalators and reduced capital expenditures, with significant free cash flow generation expected [26][28] Question: Weather impact on production - Management noted that while severe weather has affected operations, a recovery is anticipated as conditions improve, with MVCs providing revenue protection [40][41] Question: Long-term leverage target - Management stated there is no specific leverage target, but expects natural deleveraging as EBITDA grows and debt levels remain stable [43][45]