Hess Midstream LP(US:HESM)2024-07-31 20:12Financial Data and Key Metrics Changes - For Q2 2024, net income was $160 million, slightly down from $162 million in Q1 2024, while adjusted EBITDA increased to $276 million from $275 million in Q1 2024 [11][12] - Total revenues, excluding pass-through revenues, increased by approximately $26 million, driven by higher throughput volumes [12] - The gross adjusted EBITDA margin for Q2 was maintained at approximately 80%, above the target of 75% [12] Business Line Data and Key Metrics Changes - In Q2 2024, throughput volumes averaged 419 million cubic feet per day for gas processing, 126,000 barrels of oil per day for crude terminaling, and 124,000 barrels of water per day for water gathering, with increases of approximately 7% and 8% for gas processing and oil terminaling, respectively, from Q1 2024 [5][6] - Gathering revenues increased by approximately $15 million, processing revenues by $9 million, and terminaling revenues by $2 million [12] Market Data and Key Metrics Changes - Hess Corporation's net production for the Bakken averaged 212,000 barrels of oil equivalent per day in Q2 2024, exceeding guidance of 195,000 to 200,000 barrels [6] - The company anticipates Bakken net production to be in the range of 200,000 to 205,000 barrels of oil equivalent per day in Q3 2024 [6] Company Strategy and Development Direction - The company is focused on executing operational priorities and delivering growth strategies to drive sustainable cash flow generation and potential capital returns to shareholders [8] - Capital expenditures for 2024 are expected to be between $250 million and $275 million, with a focus on supporting Hess and third-party development in the Bakken [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet gas processing capacity needs in line with upstream production growth, emphasizing a strong partnership with Hess [18] - The company expects continued growth in gas and oil volumes, supporting over 10% annualized growth in adjusted EBITDA through 2026 [15][16] Other Important Information - The company has returned $1.75 billion to shareholders through unit repurchases since 2021, reducing total unit count by nearly 25% [9] - The company expects to generate over $1.25 billion of financial flexibility through 2026 for incremental shareholder returns [10] Q&A Session Summary Question: Growth outlook beyond 2024 - Management believes they have sufficient processing capacity and are planning infrastructure to meet upstream needs [18] Question: Impact of long-haul NGL expansions in the Bakken - Management noted that additional processing capacity will be needed to support increased gas production and that they are looking for opportunities to capture third-party volumes [20] Question: Competitive environment in the Bakken - Management indicated that increased export capacity will create more competition but also more opportunities for third-party business [26] Question: Capital return strategy - Management confirmed that they will maintain a leverage target of around 3 times EBITDA while continuing to return capital to shareholders [41] Question: Discrepancy between throughput and EBITDA guidance - Management explained that while they expect flat volumes in Q3 due to planned maintenance, they anticipate higher revenues and lower operating costs in Q4 [31][33] Question: Trends in water volumes - Management highlighted strong growth in water volumes due to increased infrastructure investment and operational efficiency [36]