Hess Midstream LP - Q2 2026 10-Q Summary
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for Hess Midstream LP for the period ended June 30, 2026. The Company is a fee-based, growth-oriented limited partnership operating midstream assets primarily in the Bakken and Three Forks shale plays in North Dakota. Operations are organized into three segments: Gathering, Processing and Storage, and Terminaling and Export. The Company's primary customer is its Sponsor, Chevron, which accounted for approximately 95% of revenues for the six months ended June 30, 2026.
Key Financial Metrics
| Metric (in millions) | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Total Revenues | $399.0 | $414.2 | $789.1 | $796.2 |
| Net Income | $173.7 | $179.7 | $331.4 | $341.1 |
| Net Income Attributable to Hess Midstream LP | $96.4 | $90.3 | $184.0 | $161.9 |
| Adjusted EBITDA | $313.7 | $316.0 | $613.5 | $608.3 |
| Net Cash Provided by Operating Activities | $278.6 | $276.9 | $531.9 | $479.3 |
| Capital Expenditures | $30.6 | $70.0 | $41.0 | $120.1 |
| Total Debt (Carrying Value) | $3,680.0 (as of June 30, 2026) | |||
| Cash and Cash Equivalents | $5.0 (as of June 30, 2026) |
Earnings Per Share (Class A): $0.75 basic and diluted for Q2 2026 (vs. $0.74 in Q2 2025).
Distributions: A quarterly distribution of $0.7888 per Class A Share was declared for Q2 2026, an increase of $0.0096 from Q1 2026.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 3.7% in Q2 2026 compared to Q2 2025. This was primarily driven by lower throughput volumes (down 15% for oil terminaling, 12% for water gathering, and 4% for gas processing) due to lower new-well activity and planned maintenance at the Tioga Gas Plant. These decreases were partially offset by higher tariff rates and increased third-party services.
- Cost Reductions: Total operating costs and expenses decreased 5.3% in Q2 2026, driven by lower employee costs and maintenance expenses, partially offset by higher depreciation due to new assets placed in service.
- Profitability: While consolidated net income decreased slightly ($6.0 million), net income attributable to Hess Midstream LP increased by $6.1 million ($96.4 million vs. $90.3 million) due to changes in the allocation of income to noncontrolling interests.
- Capital Expenditures: Capital expenditures decreased significantly year-over-year ($41.0 million YTD 2026 vs. $120.1 million YTD 2025) as the Company completed multi-year expansion projects for compression capacity in the prior year.
Outlook, Commentary, and Risks
- Management Commentary: Management highlighted the successful placement of a new compressor station in Q1 2026, adding 50 MMcf/d of capacity. The Company continues to pursue strategic relationships with third-party producers to maximize utilization rates.
- Share Repurchases: In Q1 2026, the Company repurchased $42.0 million of Class A Shares via an accelerated share repurchase (ASR) and $18.0 million of Class B Units from the Sponsor. These transactions were funded by borrowings under the revolving credit facility.
- Contract Structure: The majority of systems are in the "Secondary Term" of commercial agreements with Chevron (through 2033), featuring an inflation-based fee structure capped at 3% annually. Minimum Volume Commitments (MVCs) continue to provide downside risk protection.
- Risks: Key risks include the ability of Chevron to meet drilling and development plans, fluctuations in commodity prices affecting production rates, and the potential for reduced volumes if market conditions deteriorate. The Company also faces risks related to the integration of Hess into Chevron.
Investor Verification Checklist
- Chevron Dependency: Verify the stability of Chevron's production plans in the Bakken, as 95% of revenue is derived from this single affiliate.
- Volume Trends: Monitor throughput volumes for oil terminaling and water gathering, which saw double-digit declines in Q2 2026, to assess if this is a temporary maintenance issue or a structural decline in new-well activity.
- Debt Servicing: Review the Company's ability to service its $3.68 billion debt load while maintaining distributions, particularly given the recent increase in distribution rates.
- Third-Party Growth: Assess the progress of third-party service revenue, which grew significantly ($17.9 million in Q2 2026 vs. $8.2 million in Q2 2025), as a diversification strategy.
- Capital Allocation: Confirm the sustainability of the current capital expenditure run rate ($41.0 million YTD) versus the prior year's heavy investment phase.