Hess Midstream Sets Goals and Capital Plans for 2025
Hess Midstream LP (NYSE: HESM) is excited to share its financial and operational guidance, underscoring a commitment to enhancing growth and shareholder value in the coming years. As the company navigates the rapidly evolving energy sector, it aims to capitalize on increasing volumes, especially in the Bakken region.
Financial Forecast for 2025
The company projects a robust net income range between $715 million and $765 million for the year 2025, alongside an Adjusted EBITDA ranging from $1,235 million to $1,285 million. This reflects Hess Midstream's focused strategy aimed at optimizing operational efficiency and maintaining a strong revenue trajectory.
Expectations for Free Cash Flow
In terms of cash flow, Hess Midstream anticipates generating between $735 million and $785 million in Adjusted Free Cash Flow. This is particularly significant as it underscores the company’s capability to fund its distributions which are expected to grow at least 5% each year. The firm expects to decrease its leverage below the long-term target of 3x Adjusted EBITDA, highlighting its commitment to financial health.
Gas and Oil Processing Volumes
For 2025, gas gathering volumes are estimated to average 475 to 485 million cubic feet per day. Additionally, gas processing volumes are expected to range between 455 to 465 million cubic feet. Crude oil gathering is set to average between 120 and 130 thousand barrels per day, further enhancing the company’s output capabilities.
Capital Spending Overview for 2025
Hess Midstream is slated to deploy approximately $300 million in capital expenditures throughout 2025. Of this budget, around $125 million will support ongoing capital expenditures, including well connections for both Hess and third-party customers. The remaining investment will focus on project-specific capital expenditures, particularly in expanding gas gathering systems and developing new compressor stations, which will significantly increase gas processing capacity.
Long-Term Vision for Infrastructure
Additionally, the company plans to start construction on a gas processing plant with an anticipated capacity of 125 million cubic feet per day, aiming to complete this project by 2027. This initiative will support Hess Midstream's growth strategy well into the coming decade.
Commitment to Growth and Shareholder Returns
Looking beyond 2025, Hess Midstream has outlined a strategic commitment to shareholder returns through its Return of Capital framework. The company anticipates increasing its dividend by at least 5% annually through 2027, which is expected to be fully funded through Adjusted Free Cash Flow. This ongoing initiative underscores the firm’s dedication to delivering value to shareholders.
Future Throughput and Minimum Volume Commitments
Hess Midstream expects gas throughput volumes to grow by approximately 10% in 2026, followed by another 5% increase in 2027. These growth plans include newly contracted volume commitments based on Hess’s own production schedules and increasing demand from third-party producers.
Long-Term Financial Metrics
The company anticipates a continual growth trajectory for both net income and Adjusted EBITDA, projecting a minimum of 10% growth in 2026 followed by at least 5% growth in 2027. This sustained growth reinforces the importance of Hess Midstream’s services in the midstream energy market.
About Hess Midstream LP
Hess Midstream LP is a fee-based, growth-oriented midstream enterprise providing an extensive array of services to Hess and its third-party customers. With significant assets located in key North American oil and gas regions, Hess Midstream positions itself as a pivotal player in the energy sector.
Frequently Asked Questions
What is Hess Midstream's financial outlook for 2025?
Hess Midstream expects net income between $715 million and $765 million, with Adjusted EBITDA between $1,235 million and $1,285 million.
What are the projected gas gathering and processing volumes?
Gas gathering volumes are projected to average between 475 to 485 million cubic feet per day, and processing volumes are expected between 455 to 465 million cubic feet per day.
How much capital investment is planned for 2025?
The company plans to invest approximately $300 million in capital expenditures for 2025, focusing on expanding its infrastructure.
What are the company’s goals for shareholder returns?
Hess Midstream aims to increase its dividend by at least 5% annually through 2027, funded entirely by Adjusted Free Cash Flow.
What are the long-term expected growth rates for throughput volumes?
The company expects a 10% increase in gas throughput volumes in 2026, and a 5% increase in 2027.
