Hess Midstream LP(US:HESM)2025-07-30 17:00Financial Data and Key Metrics Changes - For Q2 2025, net income was $180 million compared to $161 million in Q1 2025, and adjusted EBITDA increased to $316 million from $292 million in Q1 2025 [14][15] - Adjusted EBITDA margin for Q2 was maintained at approximately 80%, above the target of 75% [15] - Total expected capital expenditures for 2025 are approximately $300 million, with adjusted free cash flow expected to be between $725 million and $775 million [8][17] Business Line Data and Key Metrics Changes - In Q2 2025, throughput volumes averaged 449 million cubic feet per day for gas processing, 137,000 barrels per day for crude terminaling, and 138,000 barrels per day for water gathering [11] - Gas processing and oil terminaling volumes increased by approximately 6% and 10% respectively from Q1 2025, driven by strong upstream production performance [11][12] Market Data and Key Metrics Changes - The company expects oil and gas throughput guidance for the full year 2025 to remain unchanged, with volume growth anticipated in Q3 2025, partially offset by higher seasonal maintenance activity [12][16] - The North Dakota Pipeline Authority forecasts that Bakken gas is expected to grow over the long term, while oil production is expected to remain flat [30][31] Company Strategy and Development Direction - The company aims to continue delivering operational excellence and financial performance, with a focus on disciplined, low-risk investments to meet basin demand [13][10] - The financial strategy prioritizes return of capital to shareholders, maintaining one of the highest total shareholder return yields among peers while keeping low leverage ratios [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance and growth trajectory, with an estimated 11% increase in adjusted EBITDA growth for 2025 [7][8] - The company anticipates generating over $1.25 billion of financial flexibility through 2027 for incremental shareholder returns, including potential unit and share repurchases [9][17] Other Important Information - Hess Midstream's senior unsecured debt was upgraded to an investment grade rating of BBB- following the Chevron merger [9] - The company has returned over $2 billion to shareholders through repurchases since 2021 and increased distributions per Class A share by more than 60% [9] Q&A Session Summary Question: Insights on Chevron's view on Bakken and rig count changes - Management indicated that they are currently running four rigs and have seen strong upstream performance, with updates to the development plan expected towards the end of the year [20][21] Question: Capital allocation and appetite for buybacks - The company confirmed that it has $1.25 billion of financial flexibility through 2027 and plans to continue repurchases at a rate of approximately $100 million per quarter [23][24][26] Question: Trends in Gas-to-Oil Ratios (GORs) and Bakken outlook - Management noted that GORs are expected to increase over the long term, with Bakken gas anticipated to grow while oil production remains flat [30][31] Question: Guidance and performance expectations - Management confirmed strong Q2 performance and maintained guidance, expecting higher EBITDA in the second half of the year despite some seasonal maintenance [38][41] Question: Governance structure post-GIP exit - The company emphasized the importance of balanced governance and has implemented mechanisms requiring independent director approval for key decisions [49][51] Question: Chevron's participation in buybacks - Management stated that there would be no change in the buyback strategy, with Chevron expected to participate similarly to previous arrangements [44][46]