Hess Midstream LP(US:HESM)2024-01-31 23:33Financial Data and Key Metrics Changes - For the fourth quarter of 2023, net income was $153 million, down from $165 million in the third quarter, while adjusted EBITDA decreased to $264 million from $271 million [10][11] - Full year 2023 adjusted EBITDA reached $1.022 billion, driven by physical volume growth [56][53] - The company expects adjusted EBITDA for 2024 to be between $1.125 billion and $1.175 billion, reflecting a growth of approximately 12.5% at the midpoint compared to 2023 [62][82] Business Line Data and Key Metrics Changes - Gas processing volumes averaged 387 million cubic feet per day in Q4 2023, while crude terminaling volumes averaged 120,000 barrels of oil per day, and water gathering volumes averaged 113,000 barrels of water per day [4][10] - For full year 2023, gas processing volumes averaged 367 million cubic feet per day, crude terminaling volumes averaged 115,000 barrels of oil per day, and water gathering volumes averaged 95,000 barrels of water per day [53][82] - The company anticipates gas processing volumes to average between 395 and 405 million cubic feet per day in 2024 [82] Market Data and Key Metrics Changes - The company expects volumes across its oil and gas systems to grow approximately 10% in 2024 compared to 2023, primarily driven by Hess's development activity [5][8] - The 2026 minimum volume commitments (MVCs) imply approximately 35% growth in gas volumes from 2023 through 2026 [47][90] Company Strategy and Development Direction - The company continues to execute a strategy of focused low-risk investments to meet base demands, delivering reliable operating performance and strong financial results [55][56] - The company has a clear visibility to at least 10% annual growth in adjusted EBITDA and adjusted free cash flow through 2026, supported by MVCs [8][16] - The company plans to maintain capital expenditures stable at approximately $250 million to $275 million through 2026 [83][92] Management's Comments on Operating Environment and Future Outlook - Management noted that extreme cold weather in January impacted volumes, but recovery has been strong, with expectations to return to pre-storm levels [5][66] - The company remains focused on maintaining flow assurance and managing egress risks in the basin [34][102] - Management expressed confidence in the growth trajectory, supported by MVCs and ongoing development activities [22][99] Other Important Information - The company has returned $1.55 billion to shareholders since 2021 through unit repurchases, reducing the total unit count by approximately 20% [9][56] - The company announced a definitive agreement for Chevron to acquire Hess's 37.8% ownership in Hess Midstream, with no expected changes to the contract structure [60][88] Q&A Session Summary Question: Impact of cold weather on Q1 volumes - Management indicated that the extreme cold weather impacted the entire system, affecting oil, gas, and water production, but recovery has been strong [66][95] Question: Long-term growth outlook and market share - Management stated that Hess is planning to run four rigs in 2024, supporting continued growth in gas and oil volumes [99][110] Question: Contract structure and potential changes - Management confirmed that there are no expected changes to the contract structure, and the focus remains on supporting Hess as the primary customer [41][102] Question: Capital allocation and buyback strategy - Management indicated that they expect to continue multiple repurchases per year and maintain a focus on shareholder returns [28][39] Question: Future capital investments and MVCs - Management noted that future capital investments will be supported by MVCs, ensuring growth and stability [109][112]