Hess Midstream Partners Q4 Earnings Call Highlights
View original at finance.yahoo.comHess Midstream Partners Q4 Earnings Call Highlights Hess Midstream Partners logo Hess Midstream Partners (NYSE:HESM) executives said the company finished 2025 with record operational execution, completed major multiyear projects on time and on budget, and is entering a period of materially lower capital spending that m…
What we drew from this source
The claims Via News extracted from this document. We point to the source; we don't replace it.
The company's guidance through 2028 implies about $1 billion of financial flexibility to continue returning capital to shareholders and paying down debt
80% confidenceThe company expects leverage to naturally deliver below 3x in the next few years as EBITDA grows and the company does not increase its absolute debt level
80% confidenceFull-year 2025 adjusted EBITDA increased about 9% from 2024
80% confidenceAdjusted free cash flow in 2026 is expected to be $850 million to $900 million, representing 12% growth over 2025 at the midpoint
80% confidenceImproving weather should help activity and production recovery
80% confidenceAdjusted free cash flow in the first quarter of 2026 is expected to increase relative to the fourth quarter of 2025 because first-quarter capital spending is projected to be lower
80% confidenceApproximately 95% of 2026 revenues are covered by minimum volume commitments (MVCs), providing significant revenue protection on a full-year basis
80% confidenceThe company expects excess adjusted free cash flow of approximately $210 million after funding its targeted 5% annual distribution growth, which it plans to use for incremental shareholder returns and debt repayment
80% confidenceThe company is funding incremental shareholder returns from free cash flow after distributions rather than leveraged buybacks
80% confidenceLonger laterals discussed by Chevron can reduce Hess Midstream's well-connect capital needs by delivering similar volumes with fewer wells
80% confidenceThe company expects lower volumes in the first half of the year relative to the second half
80% confidenceThe company finished 2025 with record operational execution and completed major multiyear projects on time and on budget
80% confidenceThe company continues to target a gross adjusted EBITDA margin of approximately 75% in 2026
80% confidenceThe capital spending trend is consistent with Chevron's plan, including a reduction in rigs from four to three
80% confidenceThe company's system is substantially built
80% confidenceThe company reiterated its longer-term framework calling for 5% annualized net income and adjusted EBITDA growth and approximately 10% annualized adjusted free cash flow growth through 2028
80% confidenceThe company's guidance and outlook are consistent with Chevron's optimized development program
80% confidence2026 capital spending is expected to be approximately $150 million, a roughly 40% reduction versus 2025
80% confidenceTariff rates across most systems are higher in 2026 than in 2025
80% confidenceSystems representing about 85% of revenues are fixed-fee with annual inflation escalators capped at 3%, while terminaling, water gathering, and a gas gathering subsystem representing about 15% of revenues reset through an annual rate redetermination process through 2033
80% confidenceThe company's gross adjusted EBITDA margin in the fourth quarter held at approximately 83%, above its 75% target, reflecting continued strong operating leverage
80% confidenceThe quarter-to-quarter decline in net income and adjusted EBITDA was primarily due to lower revenues driven by severe winter weather and slow recovery through December, as well as lower interruptible third-party volumes and annual maintenance at LM4
80% confidenceThe company expects 2027 and 2028 capex to be about $75 million, if not lower
80% confidenceThe $150 million 2026 outlook includes about $25 million to complete compression and gathering pipeline buildout, with the remainder tied to gathering system well connects and maintenance
80% confidenceFourth-quarter volumes were generally flat year-over-year but declined versus the third quarter due to severe weather during December
80% confidenceThe company continues to expect third-party volumes to average about 10% across oil and gas, though quarter-to-quarter variability can occur
80% confidenceIntegration and coordination with Chevron has helped the company optimize midstream and upstream investments to avoid overbuilding
80% confidenceCapital spending is expected to decline further in 2027 and 2028 to less than $75 million per year
80% confidenceFull-year 2026 guidance for net income is $650 million to $700 million and adjusted EBITDA is $1,225 million to $1,275 million, approximately flat at the midpoint compared with 2025
80% confidenceThe company is seeing extreme cold rather than widespread power-line impacts experienced in prior years
80% confidence