NYSE:HESM
Hess Midstream LP
A high-yield master limited partnership delivering critical midstream infrastructure services in the Permian Basin with strong free cash flow generation.
Key Metrics
Investment Thesis
Bull Case
Investors may buy Hess Midstream LP for its attractive yield profile supported by resilient free cash flow generation exceeding $684M in 2025. The company's dominant position in the Permian Basin offers long-term visibility into volume growth as upstream peers expand, providing a stable income stream for income-focused portfolios.
Bear Case
Potential buyers should avoid the stock due to heavy reliance on third-party production volumes which are vulnerable to drilling downturns. With total liabilities of $3.95B and significant cash outflows for financing and investing, balance sheet leverage remains a concern if commodity prices soften or debt refinancing costs rise.
About Hess Midstream LP
Hess Midstream LP (NYSE: HESM) is a leading midstream energy infrastructure operator focused on gathering, processing, and transporting natural gas liquids and crude oil. The company primarily serves major oil and gas producers in the Permian Basin and Eagle Ford Shale regions of Texas, providing essential upstream-to-downstream connectivity. Key products include ethane, propane, butane, natural gas, and condensate delivered through a robust network of pipelines and processing facilities.
Analysis
Management Discussion
In 2025, Hess Midstream LP reported revenue of $1.62B and net income of $684.6M, reflecting a steady upward trend from $1.28B in 2022. Operating profit reached $1.01B, driven by strong volume growth despite elevated capital expenditures of $255.6M and a substantial cash outflow from financing activities of -$730.6M largely due to share repurchases.
Industry Overview
The midstream energy industry serves as the vital transportation and storage backbone connecting oil and gas producers to end markets and refining complexes. Industry dynamics are currently characterized by consolidation among independent operators and a shift towards integrated models that offer more predictable cash flows compared to pure exploration companies.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.28B | $1.35B | $1.50B | $1.62B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $1.28B | $1.35B | $1.50B | $1.62B |
| Operating Expenses | $484.0M | $531.7M | $576.5M | $613.2M |
| Operating Income | $791.2M | $816.9M | $919.0M | $1.01B |
| G&A | $23.1M | $26.2M | $26.1M | $28.5M |
| Stock-Based Comp | $1.6M | $1.7M | $1.8M | $1.6M |
| Depreciation | $181.3M | $192.5M | $203.1M | $214.1M |
| Other OpEx | $460.9M | $505.5M | $550.4M | $584.7M |
| Non-Operating Income | $-144.0M | $-171.3M | $-188.2M | $-209.7M |
| Pre-Tax Income | $647.2M | $645.6M | $730.8M | $798.4M |
| Income Tax | $26.6M | $37.9M | $71.8M | $113.8M |
| Continuing Ops | $620.6M | $607.7M | $659.0M | $684.6M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $620.6M | $607.7M | $659.0M | $684.6M |
| Minority Interest | $536.7M | $489.1M | $435.9M | $331.7M |
| Net to Common | $83.9M | $118.6M | $223.1M | $352.9M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $132.3M | $136.8M | $149.4M | $159.0M |
| Cash & Equivalents | $3.1M | $5.4M | $4.3M | $1.9M |
| Accounts Receivable | — | $122.5M | $135.3M | $143.5M |
| Other Current Assets | $129.2M | $8.9M | $9.8M | $13.6M |
| Long-Term Assets | $3.46B | $3.65B | $4.00B | $4.23B |
| PP&E (Net) | $3.17B | $3.23B | $3.33B | $3.37B |
| Other LT Assets | $189.2M | $333.3M | $589.2M | $778.0M |
| Total Assets | $3.59B | $3.79B | $4.15B | $4.39B |
| Current Liabilities | $159.5M | $210.2M | $219.3M | $187.8M |
| Accounts Payable | — | $41.2M | $33.5M | $26.9M |
| Current Debt | $2.5M | $12.5M | $22.5M | $32.5M |
| Other Current Liab | $74.1M | $50.6M | $69.5M | $39.0M |
| Long-Term Liabilities | $2.90B | $3.22B | $3.47B | $3.76B |
| Long-Term Debt | $2.88B | $3.20B | $3.45B | $3.74B |
| Other LT Liab | $16.6M | $17.2M | $17.0M | $23.1M |
| Total Liabilities | $3.06B | $3.43B | $3.69B | $3.95B |
| Shareholders' Equity | $529.0M | $363.2M | $465.3M | $437.9M |
| Total L&E | $3.59B | $3.79B | $4.15B | $4.39B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $620.6M | $607.7M | $659.0M | $684.6M |
| Non-Cash Adjustments | $227.8M | $243.4M | $262.3M | $326.0M |
| Working Capital Changes | $12.7M | $15.3M | $19.0M | $-26.8M |
| Cash from Operations | $861.1M | $866.4M | $940.3M | $983.8M |
| Capital Expenditures | $238.2M | $223.5M | $306.1M | $255.6M |
| Cash from Investing | $-238.2M | $-223.5M | $-306.1M | $-255.6M |
| Share Buybacks | $400.0M | $400.0M | $300.0M | $400.0M |
| Cash from Financing | $-622.0M | $-640.6M | $-635.3M | $-730.6M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $900.0K | $2.3M | $-1.1M | $-2.4M |
| Beginning Cash | $2.2M | $3.1M | $5.4M | $4.3M |
| Ending Cash | $3.1M | $5.4M | $4.3M | $1.9M |
Frequently Asked Questions
How does Hess Midstream LP make money?
The company operates primarily through two main segments: Gathering Systems, which collects production from wells across the Permian and Eagle Ford basins, and Processing/Marketing, which handles fractionation of natural gas liquids (NGLs) and crude oil marketing. Additional revenue streams include transportation services for oil and gas via proprietary pipelines and interconnectivity agreements with third-party networks.
What are the main risks for HESM?
Significant exposure to upstream production declines as the company relies heavily on third-party well productivity; regulatory changes affecting environmental compliance or pipeline safety standards could increase operational costs; interest rate volatility impacting the high debt load of $3.74B; and potential geopolitical disruptions affecting global energy demand and logistics.
What is HESM's competitive advantage?
Hess Midstream LP benefits from a strategically located asset base in the prolific Permian Basin, offering low-cost access to high-volume production hubs. The company's diversified product mix across NGLs, ethane, and crude oil provides revenue stability against commodity price fluctuations, while its mature infrastructure ensures consistent cash flow generation.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.