Core Viewpoint - Hess Midstream reported strong Q2 2025 results, exceeding analyst expectations in both earnings and revenue, while also increasing its quarterly dividend, indicating robust operational performance and financial health [1][5][8]. Financial Performance - GAAP earnings per share (EPS) for Q2 2025 were $0.74, surpassing the estimate of $0.65 and up 25.4% from $0.59 in Q2 2024 [2][5]. - Revenue reached $414.2 million, exceeding expectations of $405.1 million and reflecting a 13.3% increase from $365.5 million in Q2 2024 [2][5]. - Adjusted EBITDA was $316.0 million, a 14.3% increase from $276.5 million in Q2 2024 [2][7]. - Net cash provided by operating activities was $276.9 million, up 2.0% from $271.6 million in Q2 2024 [2][7]. - Adjusted free cash flow rose 24% to $193.8 million compared to $156.4 million in Q2 2024 [2][7]. Business Overview - Hess Midstream operates energy infrastructure systems for oil, natural gas, and water in the Bakken and Three Forks shale plays, focusing on pipelines, compressor stations, and gas processing plants [3][4]. - The company relies on long-term, fee-based contracts, primarily with Hess Corporation, ensuring revenue stability [4][9]. Operational Highlights - Gas processing throughput increased by 7% to 449 million cubic feet per day, while oil terminaling volumes rose by 9% and water gathering increased by 11% year over year [6]. - The gross margin improved to 63%, up from 61% in Q2 2024, indicating enhanced profitability [7]. Capital Allocation and Shareholder Returns - The company repurchased $190.0 million in Class B units and $10.0 million in Class A shares, supporting a quarterly distribution increase to $0.7370 per share [8]. - Management aims to grow distributions by at least 5% annually through 2027, backed by excess cash flow [8][13]. Strategic Focus and Future Outlook - The company reaffirmed its full-year 2025 guidance, projecting adjusted EBITDA between $1,235 million and $1,285 million, with capital expenditures of $300 million [13]. - Hess Midstream targets gas gathering of 475–485 million cubic feet per day and crude oil terminal volumes of 130–140 thousand barrels per day for 2025 [14]. - The recent merger with Chevron is expected to influence future business priorities, although current operations remain stable [9][12].

Core Viewpoint - Energy Transfer LP (ET) has outperformed the Zacks Oil and Gas - Production Pipeline - MLB industry with a 1.5% increase in units over the past three months, compared to the industry's growth of 0.2. [1][10] Company Overview - Energy Transfer operates a vast network of nearly 140,000 miles of pipelines across North America, providing a competitive advantage through its integrated system for transporting natural gas, natural gas liquids (NGL), crude oil, and refined products. [7] - The firm is a leading exporter of liquefied petroleum gas and is expanding its NGL export facilities to meet rising global demand. [2] Performance Factors - The company's strategic acquisitions, including WTG Midstream, Lotus Midstream, and Crestwood Equity Partners, have enhanced its scale and diversified its portfolio, particularly in high-growth basins like the Permian, Williston, and Haynesville. [8] - Energy Transfer's capital expenditure plan includes an investment of $5 billion in 2025, aimed at expanding and strengthening its infrastructure. [9][10] Financial Metrics - Approximately 90% of Energy Transfer's earnings are generated from fee-based contracts, which provide stability against commodity price volatility. [11] - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 10.16% for 2025 and 10.64% for 2026. [12] - The current quarterly cash distribution rate is 32.75 cents per common unit, with management having raised distribution rates 14 times in the past five years. [15] Valuation - Energy Transfer units are currently trading at a trailing 12-month EV/EBITDA of 10.15X, which is below the industry average of 11.5X, suggesting that the firm is undervalued compared to its peers. [16] - The trailing 12-month return on equity (ROE) for Energy Transfer is 11.47%, which is lower than the industry average of 13.95%. [19] Summary - Energy Transfer is well-positioned to benefit from increasing production volumes in the oil, natural gas, and NGL sectors in the U.S. The company's fee-based earnings model and strategic acquisitions are expected to enhance value for unitholders. [22]

Core Insights - Energy Transfer LP (ET) benefits from a fee-based contract model that provides consistent cash flows and shields the company from commodity price volatility [1][2][4][5] Company Overview - Energy Transfer generates nearly 90% of its earnings from fee-based contracts, with only 10% from commodity and spread exposure, indicating a well-balanced asset mix that supports strong earnings [2][9] - The company operates 130,000 miles of pipelines across 44 states, facilitating the transportation of oil and gas products from major basins such as the Permian, Eagle Ford, and Marcellus [3] Financial Performance - The stable cash flow from fee-based contracts supports Energy Transfer's strong distribution policy and debt reduction efforts, maintaining a solid credit profile and lowering financing costs [4] - The Zacks Consensus Estimate for Energy Transfer's earnings per unit for 2025 and 2026 has increased by 2.86% and 4.26%, respectively, over the past 60 days [8] Market Position - Energy Transfer's units have appreciated by 10.2% over the past year, outperforming the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 6% [10] - The company's units are currently trading at a trailing 12-month EV/EBITDA of 10.17X, which is below the industry average of 11.39X, suggesting that the firm is undervalued compared to its peers [9][12] Industry Context - Midstream operators like Energy Transfer leverage fee-based contracts to generate stable revenues, allowing them to focus on operational efficiency and capital discipline [6] - Other companies in the sector, such as Enterprise Products Partners and Kinder Morgan, also rely heavily on fee-based income to maintain strong cash flows and support infrastructure expansions [7]