Hess Midstream LP (HESM) Bundle
A Brief History of H3
As of 2024, H3 has established itself as a significant player in the midstream sector, primarily through its operations in gathering, processing, and terminaling crude oil and natural gas. The company operates under a fee-based model, generating revenues predominantly from its agreements with Hess Corporation and third-party clients.
Financial Performance
In the first nine months of 2024, H3 reported a net income of $486.9 million, compared to $454.9 million in the same period of 2023. This positive trend reflects a robust operational performance, driven by higher throughput volumes across its facilities.
| Financial Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Income | $486.9 million | $454.9 million |
| Adjusted EBITDA | $676.0 million | $636.7 million |
| Total Revenues | $1,099.6 million | $992.1 million |
| Cash Distribution per Share | $0.6677 | $0.6343 |
Revenue Breakdown
H3's revenue streams are categorized primarily into three segments: gathering, processing and storage, and terminaling and export. The company reported substantial growth in all segments, particularly in processing and storage, which saw revenues increase due to heightened demand and increased throughput.
| Segment | 2024 Revenues | 2023 Revenues |
|---|---|---|
| Gathering | $587.1 million | $536.7 million |
| Processing and Storage | $423.7 million | $370.4 million |
| Terminaling and Export | $88.8 million | $85.0 million |
Throughput Volumes
Throughput volumes have increased significantly, reflecting the company’s capacity to handle more crude oil and natural gas due to strategic investments in infrastructure. In Q3 2024, gas gathering volumes reached 442 MMcf/d, while crude oil gathering was at 116 MBbl/d.
| Throughput Type | Volume 2024 | Volume 2023 |
|---|---|---|
| Gas Gathering | 442 MMcf/d | 404 MMcf/d |
| Crude Oil Gathering | 116 MBbl/d | 106 MBbl/d |
| Gas Processing | 419 MMcf/d | 386 MMcf/d |
| Crude Oil Terminaling | 122 MBbl/d | 129 MBbl/d |
Debt and Interest Expenses
H3 has also managed its debt strategically, issuing $600 million in 6.500% fixed-rate senior unsecured notes in 2024. Interest expenses increased to $150 million, reflecting the higher borrowing costs associated with the new debt issuance.
| Debt Metric | 2024 |
|---|---|
| Total Debt Issued | $600 million |
| Interest Expense | $150 million |
Equity Transactions
In 2024, H3 executed several equity offerings, resulting in a significant increase in public ownership from approximately 29.8% at the end of 2023 to 47.3% by September 2024. This was achieved through a series of underwritten public offerings throughout the year, raising substantial capital.
| Offering Date | Shares Sold | Net Proceeds |
|---|---|---|
| February 8, 2024 | 11,500,000 | $377.5 million |
| May 31, 2024 | 10,000,000 | $391.3 million |
| September 20, 2024 | 12,650,000 | $444.3 million |
Overall, H3 has demonstrated strong financial health and operational efficiency, setting a solid foundation for future growth and profitability in the midstream sector.
A Who Owns Hess Midstream LP (HESM)
Ownership Structure
As of September 30, 2024, the ownership of Hess Midstream LP (HESM) is characterized by a combination of Class A and Class B shares, as well as significant non-controlling interests. The following table outlines the distribution of shares and their respective ownership percentages:
| Type of Shares | Shares Outstanding (millions) | Ownership Percentage |
|---|---|---|
| Class A Shares | 113.9 | 47.3% |
| Class B Shares | 113.9 | 52.7% |
| Total Shares | 227.8 | 100% |
Major Shareholders
The majority of Hess Midstream LP is owned by Hess Corporation, which holds a significant portion of the Class B shares. The following table details the major shareholders and their ownership stakes as of late 2024:
| Shareholder | Type of Shares | Shares Owned (millions) | Ownership Percentage |
|---|---|---|---|
| Hess Corporation | Class B Shares | 113.9 | 52.7% |
| Public Investors | Class A Shares | 113.9 | 47.3% |
Financial Performance
In the third quarter of 2024, Hess Midstream reported a net income of $164.7 million, with net income attributable to Hess Midstream LP at $58.6 million. The earnings per Class A share were reported at $0.63. The financial performance is summarized in the following table:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $164.7 million | $164.8 million |
| Net Income Attributable to Hess Midstream LP | $58.6 million | $35.3 million |
| Earnings Per Class A Share | $0.63 | $0.57 |
Revenue Sources
The revenue composition for Hess Midstream LP primarily derives from fee-based commercial agreements with Hess Corporation. The following table outlines the revenue breakdown for the nine months ended September 30, 2024:
| Revenue Source | Revenue (in millions) |
|---|---|
| Affiliate Services | $1,079.3 |
| Third-Party Services | $17.6 |
| Total Revenues | $1,099.6 |
Market Dynamics
Hess Midstream LP's revenues for the first nine months of 2024 were primarily supported by Hess Corporation, which accounted for approximately 98% of total revenues. The following table summarizes the revenue dependency on Hess:
| Period | Percentage of Revenue from Hess |
|---|---|
| Q3 2024 | 98% |
| Q3 2023 | 100% |
Conclusion of Ownership Structure
Overall, Hess Midstream LP's ownership is predominantly influenced by Hess Corporation, which maintains a controlling interest through Class B shares, while public investors hold the Class A shares. The financial performance and revenue structure highlight the significant impact of Hess Corporation on the partnership's operations and profitability.
Hess Midstream LP (HESM) Mission Statement
Overview
Hess Midstream LP is committed to providing safe, reliable, and efficient midstream services to its customers while maintaining a strong focus on environmental stewardship and community engagement. The company aims to enhance its operations through strategic partnerships and innovative technologies.
Financial Performance
For the nine months ended September 30, 2024, Hess Midstream LP reported a net income of $486.9 million, compared to $454.9 million for the same period in 2023. The net income attributable to Hess Midstream LP was $152.7 million, reflecting a substantial increase from $81.1 million in the prior year.
| Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Income | $486.9 million | $454.9 million |
| Net Income Attributable to Hess Midstream LP | $152.7 million | $81.1 million |
| Adjusted EBITDA | $844.2 million | $760.7 million |
| Basic Earnings per Class A Share | $1.82 | $1.56 |
| Weighted Average Class A Shares Outstanding | 84.0 million | 52.2 million |
Operational Highlights
Hess Midstream LP's throughput volumes for gas gathering, crude oil gathering, and gas processing increased significantly in 2024:
| Throughput Volumes | 2024 (MMcf/d or MBbl/d) | 2023 (MMcf/d or MBbl/d) |
|---|---|---|
| Gas Gathering | 429 MMcf/d | 404 MMcf/d |
| Crude Oil Gathering | 112 MBbl/d | 106 MBbl/d |
| Gas Processing | 410 MMcf/d | 386 MMcf/d |
| Crude Oil Terminaling | 122 MBbl/d | 129 MBbl/d |
| Water Gathering | 128 MBbl/d | 99 MBbl/d |
Revenue Streams
The company generates its revenues primarily through fee-based commercial agreements, which provide cash flow stability. For the nine months ended September 30, 2024, total revenues were $1,099.6 million, compared to $992.1 million in the prior year.
| Revenue Breakdown | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Affiliate Services | $1,079.3 million | $986.6 million |
| Third-Party Services | $17.6 million | $3.7 million |
| Other Income | $2.7 million | $1.8 million |
Capital Expenditures
Hess Midstream LP made substantial investments in capital expenditures, totaling $204.2 million for the nine months ended September 30, 2024, compared to $173.9 million in the same period in 2023.
| Capital Expenditures | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Capital Expenditures | $204.2 million | $173.9 million |
Debt and Interest Expense
The company issued $600.0 million in fixed-rate senior unsecured notes in May 2024, contributing to an interest expense of $150.0 million for the nine months ended September 30, 2024, compared to $131.2 million in 2023.
| Debt Metrics | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Interest Expense | $150.0 million | $131.2 million |
| Total Debt Issued | $600.0 million | N/A |
How Hess Midstream LP (HESM) Works
Overview of Operations
Hess Midstream LP operates primarily in the Bakken region of North Dakota, providing integrated midstream services through three reportable segments: gathering, processing and storage, and terminaling and export. The company generates revenue through fee-based commercial agreements, which significantly reduces exposure to commodity price fluctuations.
Financial Performance
For the third quarter of 2024, Hess Midstream reported a consolidated net income of $164.7 million, with net income attributable to Hess Midstream LP of $58.6 million, or $0.63 per Class A share. This represents an increase from $35.3 million in the same quarter of 2023.
Revenue Breakdown
The revenues for the three months ended September 30, 2024, are broken down as follows:
| Service Type | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) |
|---|---|---|
| Oil and gas gathering services | $171.0 | $170.5 |
| Processing and storage services | $140.8 | $132.2 |
| Terminaling and export services | $28.9 | $31.8 |
| Water gathering and disposal services | $30.7 | $26.8 |
| Total Revenue from Contracts with Customers | $378.5 | $363.1 |
Segment Performance
For the first nine months of 2024, Hess Midstream’s revenues and other income were as follows:
| Segment | Revenue (in millions) |
|---|---|
| Gathering | $587.1 |
| Processing and Storage | $423.7 |
| Terminaling and Export | $88.8 |
| Total Revenues | $1,099.6 |
Cost Structure
Operating and maintenance expenses for the three months ended September 30, 2024, were reported as follows:
| Expense Type | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Operating and maintenance expenses | $146.8 | $143.1 |
| Depreciation expense | $51.5 | $47.7 |
| General and administrative expenses | $6.3 | $6.0 |
| Total Operating Costs and Expenses | $204.6 | $196.8 |
Throughput Volumes
As of September 30, 2024, the throughput volumes were as follows:
| Type | Volume (MMcf/d or MBbl/d) |
|---|---|
| Gas gathering | 442 MMcf/d |
| Crude oil gathering | 116 MBbl/d |
| Gas processing | 419 MMcf/d |
| Crude oil terminaling | 122 MBbl/d |
| NGL loading | 15 MBbl/d |
| Water gathering | 128 MBbl/d |
Capital Expenditures
Capital expenditures for the first nine months of 2024 were reported at $211.0 million, compared to $160.0 million for the same period in 2023.
Debt and Interest Expense
Interest expense for the third quarter of 2024 totaled $51.8 million, an increase from $45.8 million in the third quarter of 2023, primarily due to new senior unsecured notes issued in May 2024.
Tax Expenses
Income tax expense for the third quarter of 2024 was $18.9 million, up from $11.4 million in the prior year.
Shareholder Returns
For the third quarter of 2024, cash distributions declared were $0.6846 per Class A share, reflecting an increase of $0.0169 per Class A share compared to the second quarter of 2024.
Market Position and Strategy
Hess Midstream maintains a strong market position, with approximately 97% of its accounts receivable coming from contracts with Hess and its affiliates. The company aims to strengthen its relationships with third-party producers in the Bakken region to enhance capacity utilization.
Future Outlook
The company expects to continue generating revenue above Minimum Volume Commitments (MVCs) through 2024 and into 2026, supported by ongoing investments and strategic partnerships.
How Hess Midstream LP (HESM) Makes Money
Revenue Streams
Hess Midstream LP generates revenue primarily through fee-based commercial agreements with Hess Corporation and other third-party customers. In 2024, approximately 98% of revenues were derived from these agreements, which include:
- Oil and gas gathering services
- Processing and storage services
- Terminaling and export services
- Water gathering and disposal services
| Revenue Source | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Oil and Gas Gathering Services | 171.0 | 170.5 | 495.6 | 467.8 |
| Processing and Storage Services | 140.8 | 132.2 | 411.4 | 367.6 |
| Terminaling and Export Services | 28.9 | 31.8 | 85.9 | 83.2 |
| Water Gathering and Disposal Services | 30.7 | 26.8 | 86.4 | 68.0 |
| Total Revenues from Contracts | 378.5 | 363.1 | 1,099.6 | 992.1 |
Segment Performance
The company operates through three main segments: Gathering, Processing and Storage, and Terminaling and Export. Each segment has shown varied performance over the first nine months of 2024:
| Segment | Revenue (in millions) | Operating Expenses (in millions) | Adjusted EBITDA (in millions) |
|---|---|---|---|
| Gathering | 587.1 | 148.4 | 431.9 |
| Processing and Storage | 423.7 | 82.8 | 347.6 |
| Terminaling and Export | 88.8 | 23.4 | 64.7 |
| Total | 1,099.6 | 254.6 | 844.2 |
Cost Structure
Hess Midstream LP's operating and maintenance expenses have increased in 2024, primarily due to:
- Higher third-party processing fees
- Increased maintenance activity
- Higher employee costs
Operating costs for the first nine months of 2024 were reported as follows:
| Cost Type | Cost (in millions) |
|---|---|
| Operating and Maintenance Expenses | 254.6 |
| Depreciation Expense | 151.8 |
| General and Administrative Expenses | 17.2 |
| Total Operating Costs | 423.6 |
Interest and Tax Expenses
Interest expenses increased in 2024 mainly due to new debt issuance:
- Interest expense for Q3 2024 was $51.8 million, compared to $45.8 million in Q3 2023.
- Income tax expense increased to $49.2 million in the first nine months of 2024, reflecting changes in ownership following equity offerings.
Financial Highlights
Key financial metrics for Hess Midstream LP in 2024 include:
| Metric | Value |
|---|---|
| Net Income (Q3 2024) | $164.7 million |
| Net Income Attributable to Hess Midstream LP (Q3 2024) | $58.6 million |
| Adjusted EBITDA (Q3 2024) | $286.9 million |
| Cash Distribution per Class A Share (Q3 2024) | $0.6846 |
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Updated on 16 Nov 2024
Resources:
- Hess Midstream LP (HESM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hess Midstream LP (HESM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Hess Midstream LP (HESM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.