Financial Data and Key Metrics Changes - For the full year 2025, the company reported a net income of approximately $685 million and adjusted EBITDA of $1,238 million, representing a growth of approximately 9% from 2024 [10] - In Q4 2025, net income was $168 million, down from approximately $176 million in Q3 2025, while adjusted EBITDA was $309 million compared to approximately $321 million in Q3 2025 [10][11] - The company expects adjusted free cash flow in Q1 2026 to increase relative to Q4 2025, with projected capital expenditures lower than in the previous quarter [12] Business Line Data and Key Metrics Changes - Gas processing volumes for 2025 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] - In Q4 2025, 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] Market Data and Key Metrics Changes - The company anticipates lower volumes across its systems in Q1 2026 due to severe winter weather, but expects growth in volumes throughout the rest of 2026 consistent with historical seasonal expectations [6][12] - Approximately 95% of the company's revenues are protected by minimum volume commitments (MVCs) for the full year 2026, providing a stable revenue base [7][13] 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][14] - The strategy includes a targeted 5% distribution growth per Class A share through 2028, supported by significant free cash flow generation and debt repayment [5][9] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the severe winter weather impacted Q4 2025 performance but expects a recovery in production as weather conditions improve [40] - The company reiterated its long-term growth outlook, expecting approximately 10% annualized adjusted free cash flow growth through 2028, driven by gas volume growth and lower operating and capital expenditures [8][29] Other Important Information - The gross adjusted EBITDA margin for Q4 2025 was maintained at approximately 83%, above the target of 75%, indicating strong operating leverage [11] - The company had a drawn balance of $338 million on its revolving credit facility at year-end [12] Q&A Session Summary Question: Balance Sheet and Debt Repayment Strategy - Management confirmed plans to use a portion of free cash flow after distributions for debt repayment, expecting to naturally deliver below 3x leverage in the coming years as EBITDA grows [18][19] Question: Third-Party Outlook and Chevron's Production Target - Management indicated no change to the third-party outlook, expecting an average of 10% across oil and gas, and reaffirmed Chevron's target of 200,000 barrels of oil equivalent per day [21][23] Question: Growth Drivers and Cost-Cutting Impact - Management stated that growth in EBITDA is driven by inflation escalators and gas volume growth, with free cash flow growth supported by reduced capital expenditures [27][29] Question: Capital Expenditures Flexibility - Management expects capital expenditures to be lower than $150 million in 2026, with potential for further reductions in 2027 and 2028 [32][35] Question: Weather Impact on Production - Management noted that while severe weather has impacted production, they expect a recovery as conditions improve, with 95% of revenues protected by MVCs [40][41] Question: Long-Term Leverage Target - Management indicated there is no specific leverage target, but expects natural deleveraging as EBITDA grows and debt levels remain stable [43][44]

Core Insights - The company is reiterating its volume guidance for 2026, expecting growth in volumes consistent with historical seasonal expectations, with revenues approximately 95% protected by minimum volume commitments (MVCs) [1][13] - For 2026, the company anticipates lower volumes due to severe winter weather and normal contingencies, but expects adjusted EBITDA growth of 12% over 2025 at the midpoint [2][6] - The capital expenditure is projected to decrease significantly, with a target of approximately $150 million for 2026, a 40% reduction from 2025 [4][31] Financial Performance - In 2025, the company reported a net income of approximately $685 million and adjusted EBITDA of $1.238 billion, reflecting a 9% growth from 2024 [7] - For the fourth quarter of 2025, net income was $168 million, and adjusted EBITDA was $309 million, showing a decrease from the previous quarter due to severe winter weather [8][10] - The company expects net income for 2026 to be between $150 million and $160 million, with adjusted EBITDA projected at approximately $295 million to $305 million [11][13] Capital Expenditure and Cash Flow - The company plans to reduce capital spending further in 2027 and 2028 to less than $75 million per year, leveraging historical investments to drive significant free cash flow generation [3][5] - Adjusted free cash flow for 2026 is expected to be between $850 million and $900 million, with excess cash flow projected at approximately $210 million after funding targeted distribution growth [14][6] - The company aims for a gross adjusted EBITDA margin of approximately 75% in 2026, with total expected capital expenditures of around $150 million [13][14] Revenue and Rate Structure - Approximately 85% of the company's revenues are fixed fee, with rates increasing annually based on an inflation escalator capped at 3% [12] - The company continues to reset rates through an annual rate redetermination process, with expectations for higher tariff rates in 2026 compared to 2025 [12][13] - The company maintains a strong MVC position, with 95% revenue protection in 2026 and 90% in 2027, providing a buffer against volume fluctuations [40][29]

Financial Data and Key Metrics Changes - For Q1 2025, net income was $161 million, down from $172 million in Q4 2024. Adjusted EBITDA decreased to $292 million from $298 million in the previous quarter, primarily due to lower volumes and revenues, partially offset by lower costs and annual rate increases due to inflation [12][13] - Total revenues, excluding pass-through revenues, decreased by approximately $13 million, driven by lower throughput volumes from severe winter weather [12] Business Line Data and Key Metrics Changes - Throughput volumes averaged 424 million cubic feet per day for gas processing, 125,000 barrels per day for crude terminaling, and 126,000 barrels per day for water gathering, reflecting a decrease compared to Q4 2024 due to lower production from Hess [6][12] - Processing revenues decreased by approximately $7 million, while gathering revenues decreased by approximately $6 million [12] Market Data and Key Metrics Changes - Hess reported first quarter net production for the Bakken averaged 195,000 barrels of oil equivalent per day, with expectations for Q2 production to be in the range of 210,000 to 215,000 barrels, representing a 9% increase at the midpoint compared to Q1 [6][12] Company Strategy and Development Direction - The company remains focused on disciplined, low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance. The capital program includes completion of two new compressor stations and starting civil construction on the Capa gas plant, with total capital expenditures expected to be approximately $300 million for 2025 [9][12] - The company aims to generate sustainable cash flow and create opportunities to return additional capital to shareholders, with a targeted annual distribution growth of at least 5% through 2027 [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in throughput volumes following severe winter weather, indicating a strong performance in March and a positive trajectory into Q2 [43] - The company highlighted its ability to maintain stability and visibility even during volatile periods, supported by contracts with no direct commodity price exposure and a low leverage ratio of approximately 3.1 times adjusted EBITDA [22][11] Other Important Information - The company has returned $1.95 billion to shareholders through accretive repurchases since the beginning of 2021, with a total shareholder return yield among the highest in the midstream sector [10] - Adjusted free cash flow for Q1 2025 was approximately $191 million, with expectations for excess adjusted free cash flow of approximately $135 million after fully funding targeted growing distributions for the year [13] Q&A Session Summary Question: Bakken outlook amidst macroeconomic volatility - Management noted that activity levels remain consistent, with Hess reaffirming plans to run four rigs for the rest of the year, supported by established MVCs through 2027 [20][21] Question: Volumes in excess of MVCs - Management indicated that MVCs are set at approximately 80% of nomination, with expectations for long-term growth in both Hess and third-party volumes [26] Question: Rig count and potential reductions - Management expressed confidence in maintaining the four rig count, emphasizing a focus on long-term supply-demand dynamics despite short-term volatility [31][32] Question: Buybacks and secondaries - Management clarified that there are no specific plans for secondaries, and they expect to continue multiple repurchases per year, maintaining financial flexibility [36][38] Question: Gas processing volumes recovery - Management reported a strong recovery in processing volumes following weather challenges, with optimism for meeting annual guidance [43] Question: Capital allocation and leverage - Management explained that the $1.25 billion of financial flexibility is driven by both leverage capacity and excess cash flow, with plans to maintain a leverage ratio below 2.5 times by the end of 2026 [58]

Financial Data and Key Metrics Changes - For Q1 2025, net income was $161 million, down from $172 million in Q4 2024 [11] - Adjusted EBITDA for Q1 2025 was $292 million, compared to $298 million in Q4 2024, primarily due to lower volumes and revenues [11] - Total revenues, excluding pass-through revenues, decreased by approximately $13 million, driven by lower throughput volumes [11] - Adjusted free cash flow for Q1 2025 was approximately $191 million [12] Business Line Data and Key Metrics Changes - Gas processing throughput averaged 424 million cubic feet per day, crude terminaling averaged 125,000 barrels per day, and water gathering averaged 126,000 barrels per day [5] - Processing revenues decreased by approximately $7 million, and gathering revenues decreased by approximately $6 million due to lower throughput volumes [11] Market Data and Key Metrics Changes - Hess reported first quarter net production for the Bakken averaged 195,000 barrels of oil equivalent per day, with expectations for Q2 production to be in the range of 210,000 to 215,000 barrels, reflecting a 9% increase at the midpoint compared to Q1 [5] Company Strategy and Development Direction - The company remains focused on disciplined, low-risk investments to meet basin demand while maintaining reliable operations and strong financial performance [7] - Capital expenditures for 2025 are expected to total approximately $300 million, unchanged from previous guidance [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong recovery in volumes following challenging weather conditions in January and February [42] - The company anticipates adjusted EBITDA in the second half of 2025 to be approximately 11% higher than in the first half [13] Other Important Information - The company has returned $1.95 billion to shareholders since the beginning of 2021 through share repurchases and has increased distributions per Class A share by approximately 57% since 2021 [9] - The company expects to generate over $1.25 billion of financial flexibility through 2027 for incremental shareholder returns [10] Q&A Session Summary Question: Bakken outlook in light of ongoing macroeconomic volatility - Management noted that activity levels remain stable, with no changes in Hess's plans to run four rigs for the rest of the year, supported by established MVCs through 2027 [19][20] Question: Volumes in excess of MVCs and performance against MVCs - Management indicated that MVCs are set at approximately 80% of nomination, with third parties expected to represent about 10% of total volume [24] Question: Risk of rig reduction in the current macro environment - Management reaffirmed that they are looking past short-term volatility and expect consistent activity levels in the Bakken [30][31] Question: Buybacks and secondaries - Management clarified that there is no specific plan for secondaries and expects to continue multiple repurchases per year, with flexibility for $1.25 billion through 2027 [36][37] Question: Gas processing volumes recovery - Management reported a strong recovery in volumes and expressed optimism about meeting guidance for the year [42][43] Question: Impact of oil prices on rig count - Management stated that they are prepared for price volatility and expect to maintain the four-rig program, with improved well economics reducing breakeven costs [45][48] Question: Gas growth in the basin and egress - Management anticipates gas volumes to continue increasing over time, supported by existing export agreements [55][66]