Hess Midstream LP(US:HESM)2022-10-26 20:22Financial Data and Key Metrics Changes - For Q3 2022, net income was $159 million, an increase from $152 million in Q2 2022. Adjusted EBITDA rose to $254 million from $243 million in the previous quarter, driven by higher MVC and throughput volumes [20][21][24] - The gross adjusted EBITDA margin for Q3 was maintained at approximately 80%, indicating strong operating leverage [22] - Distributable cash flow for Q3 was approximately $215 million, covering distributions by 1.6 times [22] Business Line Data and Key Metrics Changes - Hess Midstream's Q3 throughput volumes averaged 110,000 barrels of oil per day for crude terminaling and 83,000 barrels of water per day for water gathering, reflecting a 20% recovery from Q2 [11] - Gas processing volumes exceeded MVC levels, averaging 354 million cubic feet per day, contributing to the increase in adjusted EBITDA [11][20] Market Data and Key Metrics Changes - Hess reported Q3 Bakken net production of 166,000 barrels of oil equivalent per day, exceeding guidance of 155,000 to 160,000 barrels [9] - The company anticipates fourth quarter Bakken net production to be in the range of 165,000 to 170,000 barrels of oil equivalent per day [9] Company Strategy and Development Direction - The company is focused on executing its strategy to support Hess Corporation's growth in the Bakken, with a planned production ramp to approximately 200,000 barrels of oil equivalent per day by 2024 [10][40] - The strategy includes a commitment to achieving zero routine flaring by the end of 2025, which is expected to drive long-term volume growth [10][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the visibility of revenue and adjusted EBITDA growth, supported by organic growth above MVCs in 2023 and 2024 [28][30] - The company expects to maintain stable capital expenditures in 2023, with a focus on compression and gathering to support Hess's production growth [34][40] Other Important Information - Full year 2022 capital expenditures are projected to total approximately $235 million, with a focus on flare reduction and gas gathering infrastructure expansion [16] - The company announced a 5% increase in its third quarter distribution, representing a 10% increase compared to Q3 2021 [24] Q&A Session Summary Question: Future CapEx outlook - Management indicated that future CapEx for 2023 is expected to be stable, at or below 2022 levels, with a focus on compression and gathering [34][40] Question: Zero routine flaring commitment - Management sees the commitment to zero routine flaring as a positive catalyst for midstream operations, with Hess currently achieving over 95% gas capture [42] Question: Impact of interest rates on financing costs - Management noted that only 15% of their debt is floating, providing significant flexibility in financing costs and no immediate pressures from interest rate changes [44][46] Question: Volume growth and MVC levels - Management confirmed expectations for growth in 2023 and 2024, with all systems anticipated to be above MVC levels [52][54]