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Hess Midstream Partners LP HESM

Energy  —  Oil & Gas Midstream
38.25 (0.22) (0.57%) as of 25 Sep
Market cap
$7.9B
P/E
13.2×
Dividend Champion (10y) Cash Flow Champion (5y) Revenue Champion (5y)
Growth Flags show if company had growth for consecutive years
Overview Business Profile Financial Analysis Income Statement Balance Sheet Cash Flow Metrics & Ratios 10-Q 10-K

Hess Midstream Partners LP (HESM) Business Profile

Updated before January 2025

Company Overview

Hess Midstream Partners LP (HESM) is a leading midstream energy company that provides essential infrastructure and services to support the production, transportation, and storage of crude oil and natural gas. The company was founded in 2014 as a joint venture between Hess Corporation and Global Infrastructure Partners. Headquartered in Houston, Texas, HESM operates primarily in the Bakken region of North Dakota, one of the most prolific oil and gas-producing regions in the United States.

HESM’s leadership team is composed of experienced professionals with deep expertise in the energy sector. John Hess, the CEO of Hess Corporation, plays a pivotal role in guiding the strategic direction of HESM. Jonathan Stein serves as the Chief Financial Officer, overseeing the company’s financial operations and ensuring sustainable growth. The leadership team is committed to operational excellence, safety, and environmental stewardship.

Core Business Segments

Hess Midstream Partners LP operates through three primary business segments:

1. Gathering

HESM provides crude oil, natural gas, and produced water gathering services. The company owns and operates an extensive network of pipelines and facilities that transport these resources from production sites to processing plants or storage facilities. Key services include:

  • Crude oil gathering systems
  • Natural gas gathering systems
  • Produced water gathering and disposal services

2. Processing and Storage

HESM offers natural gas processing and crude oil storage services. The company operates gas processing plants that separate natural gas liquids (NGLs) from raw natural gas, ensuring the product meets pipeline specifications. Additionally, HESM provides storage solutions for crude oil, enabling producers to manage inventory efficiently. Key assets include:

  • Gas processing plants
  • Crude oil storage terminals

3. Terminaling and Export

HESM facilitates the transportation of crude oil and natural gas liquids to end markets through its terminaling and export services. The company’s infrastructure includes rail and truck terminals, as well as pipeline connections to major transportation hubs. Key offerings include:

  • Crude oil terminaling
  • NGL export services

Business Model

HESM operates under a fee-based business model, which provides stable and predictable cash flows. The company generates revenue by charging fees for gathering, processing, storage, and terminaling services. This model minimizes exposure to commodity price volatility, as HESM’s earnings are primarily tied to the volume of resources handled rather than market prices.

HESM benefits from long-term contracts with Hess Corporation, its primary customer, which ensures a steady demand for its services. The company’s integrated infrastructure network allows it to provide end-to-end solutions, creating value for its customers and enhancing operational efficiency.

Strategic Direction

Hess Midstream Partners LP is focused on expanding its infrastructure and service offerings to support the growing production in the Bakken region. Key strategic initiatives include:

  • Infrastructure Expansion: HESM plans to invest in new pipelines, processing plants, and storage facilities to accommodate increasing production volumes.
  • Sustainability Goals: The company is committed to reducing its environmental footprint by implementing advanced technologies and practices to minimize emissions and water usage.
  • Diversification: HESM is exploring opportunities to expand its service offerings and enter new markets, including renewable energy infrastructure.
  • Operational Excellence: The company aims to enhance efficiency and reliability through continuous improvement initiatives and investments in digital technologies.

Competitive Landscape

Hess Midstream Partners LP operates in a competitive market, facing competition from both large integrated energy companies and smaller regional players. Key competitors include:

  • Enterprise Products Partners LP: A leading provider of midstream energy services with a diverse portfolio of assets.
  • Plains All American Pipeline LP: Specializes in the transportation and storage of crude oil and NGLs.
  • ONEOK, Inc.: Focuses on natural gas gathering, processing, and transportation.
  • Enbridge Inc.: A major player in the midstream sector with extensive pipeline and storage infrastructure.

HESM differentiates itself through its strong relationship with Hess Corporation, strategic location in the Bakken region, and fee-based business model.

Risk Factors

Hess Midstream Partners LP faces several risks that could impact its operations and financial performance:

  • Market Dependence: The company relies heavily on Hess Corporation for a significant portion of its revenue. Any disruption in Hess Corporation’s operations could adversely affect HESM.
  • Regulatory Risks: Changes in environmental regulations or permitting requirements could increase operational costs or delay projects.
  • Commodity Price Volatility: While HESM’s fee-based model reduces exposure to price fluctuations, prolonged downturns in oil and gas prices could impact production volumes and demand for its services.
  • Supply Chain Disruptions: Delays or shortages in equipment and materials could affect the company’s ability to execute projects on time and within budget.

Recent Developments

Hess Midstream Partners LP has recently undertaken several initiatives to strengthen its position in the market:

  • Expansion Projects: The company announced plans to expand its gas processing capacity in the Bakken region to meet growing demand.
  • Sustainability Initiatives: HESM has implemented measures to reduce greenhouse gas emissions and improve water management practices.
  • Financial Performance: The company reported strong financial results for the latest quarter, driven by higher volumes and operational efficiencies.
  • Global Developments: The ongoing energy transition and geopolitical events have highlighted the importance of reliable midstream infrastructure, positioning HESM as a critical player in the energy supply chain.

Investment Considerations

Strengths:

  • Stable and predictable cash flows from fee-based contracts
  • Strategic location in the Bakken region
  • Strong relationship with Hess Corporation
  • Commitment to sustainability and operational excellence

Risks:

  • Dependence on a single customer for a significant portion of revenue
  • Exposure to regulatory and environmental risks
  • Potential impact of supply chain disruptions

Investors should weigh these factors carefully when considering HESM as a potential investment.

Conclusion

Hess Midstream Partners LP is a well-established midstream energy company with a strong presence in the Bakken region. The company’s fee-based business model, strategic infrastructure, and commitment to sustainability position it for long-term growth. While it faces certain risks, HESM’s focus on operational excellence and strategic expansion initiatives make it a compelling player in the midstream sector.