The case for & against
Bull & Bear analysis
Bullish
Hess Midstream LP (NYSE: HESM) operates as a midstream service provider in the North American energy sector, focusing primarily on gathering, processing, and terminaling of oil and gas in the Bakken region. The company has established a strategic alignment with upstream operators, particularly Chevron, enhancing its operational capabilities while generating stable cash flows from long-term contracts. As a key player in the midstream energy infrastructure, Hess Midstream stands to benefit from the ongoing demand in the energy sector, especially amidst geopolitical tensions affecting oil supply.
Bull says
- ↑~95% of revenues from minimum volume commitments ensures predictable cash flows
- ↑8.3% current yield with distributions growing ~10% annually
- ↑2026 free cash flow raised to $910–960M, up ~20% YoY
- ↑Capital expenditures cut to ~$100M in 2026 to boost FCF
- ↑Solid profitability and positive sensitivity to rising oil prices and rates
- ↑Share repurchases and dividends supported by strong contract cash flows
Bear says
- ↓Elevated leverage increases risk if cash flows dip
- ↓Low earnings yield and weak growth metrics signal valuation concerns
- ↓Seasonal weather can curb throughput, hitting revenues
- ↓Dependence on Chevron’s Bakken program poses partner risk
- ↓Capex cuts may limit long-term growth and asset upkeep
- ↓Negative revisions and weak factor signals highlight fundamental headwinds
Investment themes with HESM
Midstream↓ -0.47%
SUN · EPD · PAA
Natural Gas↓ -0.85%
Producers and distributors of natural gas
COP · EOG · FANG
Earnings Call · Q1 2025 · Mgmt. Guidance
Updated 06-14-2026neutral
Transcript signals
Bull points
- Throughput volumes averaged 424 million cubic foot per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering.
- Since the beginning of 2021, we have returned $1.95 billion to shareholders through accretive repurchases.
- In addition, through the combination of our 5% targeted annual distribution growth and 10 distribution level increases following each repurchase, we have increased our distribution per Class A share by approximately 57% since 2021.
Bear points
- throughput volumes were down compared to the fourth quarter, reflecting lower production from HESS due to severe winter weather in January and February
- Adjusted EBITDA for the first quarter of 2025 was $292 million compared to $298 million for the fourth quarter of 2024.
- As guided in January, adjusted EBITDA decreased relative to the fourth quarter of 2024 as was primarily attributable to low volumes and revenues partially offset by lower costs and the annual increase in rates due to inflation.
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