Hess Midstream LP(US:HESM)2021-01-27 20:55Financial Data and Key Metrics Changes - Hess Midstream reported a full year adjusted EBITDA of $749 million for 2020, representing a 36% growth compared to 2019 [34] - For Q4 2020, net income was $132 million, an increase from $116 million in Q3 2020, and adjusted EBITDA was $199 million, up from $182 million in Q3 2020 [35][36] - The company achieved a leverage ratio of 2.6 times adjusted EBITDA, below the target of 3 times [34][40] Business Line Data and Key Metrics Changes - Gas processing volumes averaged 317 million cubic feet per day in Q4 2020, exceeding expectations due to strong performance and increased gathering capacity [17] - Crude terminaling volumes were 132,000 barrels of oil per day, in line with guidance, while water gathering volumes averaged 81,000 barrels of water per day, showing a modest increase [18][19] - The company completed expansions of compressor stations, increasing gas gathering capacity by 70 million cubic feet per day, or approximately 30% over 2019 [12] Market Data and Key Metrics Changes - Bakken production averaged 189,000 barrels of oil equivalent per day in Q4 2020, a 9% increase year-over-year, with full year 2020 production averaging 193,000 barrels of oil equivalent per day [20][21] - The company expects Bakken net production to average approximately 170,000 barrels of oil equivalent per day in 2021 [22] Company Strategy and Development Direction - Hess Midstream's strategy focuses on maintaining safe operations while executing growth projects, including the Tioga Gas Plant expansion, which will double processing capacity to 500 million cubic feet per day [11][31] - The company has a contract structure with 100% fee-based revenues and volume protection through 2033, providing stability and visibility for future growth [17][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macro environment, highlighting a strong operational performance despite the pandemic [10][34] - The company anticipates a modest decline in Q1 2021 volumes due to seasonal factors but expects adjusted EBITDA to grow approximately 17% in 2021 compared to 2020 [27][47] Other Important Information - The company plans to reduce capital expenditures in 2021 to $160 million, approximately 35% lower than in 2020, focusing on gas compression and system optimization [29] - The company announced a 5% increase in its quarterly distribution, marking the 14th consecutive quarterly increase since its IPO [40] Q&A Session Summary Question: Thoughts on capital allocation and potential acquisition of GOMM assets - Management continues to evaluate Gulf of Mexico assets and is aware of the political climate affecting potential acquisitions [61][62] Question: Consideration of growth opportunities outside Gulf of Mexico - Management is not pursuing corporate acquisitions at this time but is looking for strategic bolt-on opportunities in the Bakken [64][66] Question: Positioning regarding DAPL uncertainty and third-party activity - Management stated that DAPL developments do not significantly impact Hess Midstream, and they are well-positioned to support growth in the Bakken [74][75] Question: Guidance on gas capture opportunities - Management highlighted the successful addition of compression capacity and expects continued growth linked to Hess's development plans [86][90]