Hess Midstream LP(US:HESM)2020-01-29 21:06Financial Data and Key Metrics Changes - For Q4 2019, net income was $75 million, down from $87 million in Q3 2019, impacted by $26 million in acquisition costs related to HIP [26] - Adjusted EBITDA for Q4 2019 was $158 million, a 16% increase from Q3 2019, driven by a more than 15% increase in total revenues [27] - Full year 2020 guidance expects net income to range from $440 million to $480 million, and adjusted EBITDA to be between $710 million and $750 million, representing a 32% increase over 2019 [34] Business Line Data and Key Metrics Changes - Gas processing volumes averaged 308 million cubic feet per day in Q4 2019, a 20% increase from Q3 2019 and a 30% increase from Q2 2019 [10] - Crude terminaling volumes in Q4 2019 were 148,000 barrels per day, a 14% increase from Q3 2019, driven by Hess production [11] - Water gathering volumes in Q4 2019 were 50,000 barrels per day, an 11% increase from Q3 2019, reflecting Hess' growing production [11] Market Data and Key Metrics Changes - Hess reported Q4 2019 production from the Bakken of 174,000 barrels of oil equivalent per day, a 38% increase year-over-year [12] - Full year 2020 Bakken net production is forecasted to average approximately 180,000 barrels of oil per day, an 18% increase over 2019 [12] Company Strategy and Development Direction - Hess Midstream aims for significant adjusted EBITDA growth and increasing free cash flow generation, with a focus on executing its strategy and leveraging its new structure [20][37] - The company plans to invest approximately $335 million in capital expenditures for 2020, with a focus on gas processing and infrastructure expansion [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 15% annualized distribution growth through 2021, with a commitment to maintaining a conservative leverage ratio [24][34] - The anticipated maintenance turnaround at TGP in Q3 2020 is expected to impact volumes and revenues, but has been incorporated into the 2020 guidance [33] Other Important Information - The acquisition of Hess Infrastructure Partners was completed in December 2019, eliminating IDR payments and converting to an Up-C corporate structure [7] - The company expects to maintain a distribution coverage of approximately 1.2 times in 2020, with a focus on organic growth and financial metrics [32][43] Q&A Session Summary Question: Can you provide insight on the ongoing CapEx for 2020 and beyond? - Management indicated that ongoing capital expenditures will be lower as expansion projects ramp down, with a historical range of approximately $135 million expected [40] Question: What is the expected CapEx for TGP in 2021? - Management stated that a significant portion of the TGP expansion will be completed in 2020, with some residual spending expected in 2021 [41] Question: How will distribution growth be managed post-2021? - Management emphasized that distribution growth will align with organic growth and financial targets, maintaining a disciplined approach [42][43] Question: What is the expected ramp-up of gas gathering and processing volumes post-turnaround? - Management expects a natural ramp-up of volumes post-turnaround, with available gas already in the system [45] Question: Can you break down the EBITDA growth drivers for 2020? - Management noted that approximately two-thirds of the expected EBITDA growth is from volume growth, with the remainder from increased tariff rates [51]