Hess Midstream LP

What they do

Hess Midstream owns and operates midstream assets primarily in the Bakken and Three Forks shale plays in North Dakota, providing gathering, processing and storage, and terminaling and export services. Its operations are organized into three reportable segments: gathering; processing and storage; and terminaling and export. The company earns fees under commercial agreements with its sponsor, Chevron, and third-party customers.

Revenue drivers

• Gathering — Collects natural gas, crude oil, and produced water from wellheads; revenues driven by throughput volumes and fee-based tariffs. Q2 2026 water gathering volumes fell 12% year-over-year.
• Processing and storage — Processes natural gas and stores natural gas liquids; includes the LM4 plant. Higher volumes at LM4 boosted equity income in Q2 2026.
• Terminaling and export — Provides crude oil terminaling and export services; Q2 2026 oil terminaling throughput fell 15% year-over-year due to lower production and new-well activity.

Recent performance

For Q2 2026, Hess Midstream reported net income of $173.7 million, down from $179.7 million in Q2 2025. Net income attributable to Hess Midstream was $96.4 million, or $0.75 per basic Class A share. Revenues and other income were $399.0 million, down from $414.2 million in the prior-year quarter, primarily due to lower throughput volumes, partially offset by higher tariff rates and third-party services. Adjusted EBITDA was $313.7 million and net cash provided by operating activities was $278.6 million. The company increased its quarterly distribution to $0.7888 per Class A share.

Strategy

Management is focused on generating adjusted free cash flow to support shareholder returns and balance sheet strength. Hess Midstream recently placed in service a new compressor station in early 2026, adding approximately 50 MMcf/d of compression capacity, with potential to expand by another 20 MMcf/d. The company continues to execute Class B unit repurchases and accelerated share repurchases, funded through its revolving credit facility. Guidance for full-year 2026 financial and throughput results was reaffirmed in the Q2 earnings release.

Risks

• Dependence on Chevron — Hess Midstream is substantially dependent on Chevron, its sponsor, for volumes and revenue under commercial agreements; if Chevron reduces drilling or production, demand for services could decline.
• Production decline — Lower new-well activity in the Bakken reduced throughput volumes in Q2 2026, and continued production declines could pressure revenue and earnings.
• High leverage — The company has significant consolidated indebtedness with terms that may restrict its business; long-term debt stood at $3.64 billion against total assets of $4.26 billion.
• Operational and market risks — Operations face commodity price risks, operational hazards, and weather-related volume fluctuations in a limited geographic area; any decrease in volumes handled could adversely affect results.

Outlook

Management reaffirmed full-year 2026 financial and throughput guidance, including continued focus on execution and generating adjusted free cash flow. The new compressor station placed in service in early 2026 is expected to support Chevron's and third-party production growth. The company plans to continue returning capital to shareholders through distributions and share repurchases while maintaining balance sheet strength.