Street Calls of the Week
HOUSTON - Hess Midstream LP (NYSE:HESM), a midstream operator with a market capitalization of $8.3 billion and an impressive track record of maintaining dividend payments for 9 consecutive years, announced Thursday it has revised its financial and operational guidance through 2027 following Chevron’s decision to decrease Bakken drilling activity from four to three rigs starting in the fourth quarter of 2025. According to InvestingPro data, the company currently offers a substantial 7.5% dividend yield.
The midstream operator now expects oil throughput volumes to plateau in 2026, while maintaining its projection for continued growth in gas throughput volumes through at least 2027. The company, which generated $1.18 billion in EBITDA over the last twelve months, anticipates relatively flat Adjusted EBITDA in 2026 compared to 2025, with growth resuming in 2027 driven by increasing gas volumes and inflation escalation provisions in its commercial agreements. With a beta of 0.63, HESM has demonstrated lower volatility compared to the broader market.
Hess Midstream has significantly reduced its capital expenditure forecasts for 2026 and 2027 after suspending engineering activities on the previously planned Capa gas plant, which has been removed from its forward planning.
For 2025, the company has lowered its gas throughput guidance due to adverse weather conditions, maintenance in the third quarter, and reduced third-party volumes expected in the fourth quarter. Gas gathering volumes are now projected to average between 455 to 465 million cubic feet per day, with gas processing volumes between 440 to 450 million cubic feet per day.
Despite these adjustments, Hess Midstream reaffirmed its commitment to financial stability, maintaining its long-term leverage target of 3x Adjusted EBITDA and continuing its plan for annual distribution growth of at least 5% per Class A share through 2027.
"Hess Midstream’s strategy continues to focus on delivering differentiated cash flow stability and balance sheet strength that supports consistent and ongoing return of capital to shareholders," said Jonathan Stein, Chief Executive Officer of Hess Midstream. The company’s financial health score of 2.86 (GOOD) on InvestingPro supports this stability, with revenue growing at 9% year-over-year. For deeper insights into HESM’s financial metrics and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The company expects to issue updated operational and financial guidance, including 2028 minimum volume commitments, following Chevron’s updated development plan and Hess Midstream’s 2026 budget approval in December. Trading at a P/E ratio of 14.7, analysts maintain a positive outlook for HESM, with three analysts recently revising their earnings estimates upward. InvestingPro subscribers can access over 10 additional exclusive ProTips and detailed financial analysis for HESM.
This article is based on information from a company press release.
In other recent news, Hess Midstream Partners LP reported strong financial results for the second quarter of 2025. The company achieved earnings per share of $0.74, surpassing analyst expectations of $0.66. Revenue also exceeded projections, coming in at $414.2 million compared to the anticipated $405.13 million. In another development, UBS downgraded Hess Midstream from Buy to Neutral, citing concerns over potential reduced drilling activity in the Bakken region due to low commodity prices. The firm lowered its price target for the company to $43.00 from $45.00. Additionally, Hess Midstream announced a leadership change with John A. Gatling resigning as President and Chief Operating Officer, effective September 26. Michael S. Bast has been appointed to succeed Gatling in these roles. Bast has been with Hess since 2007 and has extensive experience in upstream and midstream operations. These developments highlight significant changes and achievements within Hess Midstream.
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