stockrowWhat it does
Hess Midstream is a fee-based limited partnership that owns and operates infrastructure used to move, process and store oil, natural gas and related products. It provides services to Chevron, its subsidiaries and third-party customers. Its assets are primarily in the Bakken and Three Forks shale plays in North Dakota’s Williston Basin.
The business connects producing wells to processing plants, storage sites, rail terminals and other pipelines. Its gas systems gather and compress natural gas before it is processed. Processing separates the gas and recovers natural gas liquids, or NGLs, such as propane and butane. The company also gathers crude oil, moves it to terminals for transport, and collects and disposes of water produced alongside oil and gas.
Hess Midstream operates through gathering, processing and storage, and terminaling and export businesses. Its assets include the Tioga Gas Plant, crude oil and gas gathering pipelines, water disposal facilities, the Tioga Rail Terminal and a propane storage terminal in Minnesota. It also owns an interest in the Little Missouri 4 gas processing plant, which is operated by Targa Resources.
The company generally charges fees for the volumes it handles rather than selling the oil and gas itself. Long-term commercial agreements with Chevron include minimum volume commitments for most services.
How it makes money
Hess Midstream earns fees for gathering, compressing and processing gas; gathering and transporting crude oil; terminaling and loading oil and NGLs; storing propane; and handling produced water. Its agreements with Chevron generally charge a fee for each unit delivered, such as a barrel of oil or water or a volume of gas.
The gathering business connects wells to downstream facilities and handles produced water. Gathering Opco generated $870.6 million in revenue in FY2025; the gathering business also includes water services. Processing and storage, which includes the Tioga Gas Plant, the company’s interest in Little Missouri 4 and the Mentor Storage Terminal, generated $620.0 million in FY2025. Terminaling and export generated $130.7 million in FY2025.
The Chevron agreements require minimum volumes based on development-plan nominations. If Chevron delivers less than an applicable quarterly commitment, it pays a shortfall fee. For most services in their secondary contract terms, Chevron can apply credits from shortfall payments against volumes above its nominated amounts in the following four quarters; unused credits then expire. Storage services do not have a minimum volume commitment.
Several agreements were extended through December 31, 2033. For most systems, fees are now adjusted annually for inflation, subject to a cap, while rates for terminaling and water gathering continue to be reset through an annual process. The agreements covering most services also include inflation escalators and fee recalculation mechanisms.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Affiliate services | $1.6 billion | 97.3% | 7.21% |
| Third-party services | $43.6 million | 2.70% | 80.9% |
Customers and how it sells
Chevron and its subsidiaries are Hess Midstream’s principal customers. Affiliate services revenue was $1.6 billion in FY2025, representing 97.3% of revenue. Third-party services revenue was $43.6 million in FY2025, or 2.70% of revenue. The company also handles third-party volumes delivered under Chevron’s commercial agreements.
The company’s assets are primarily in the Bakken and Three Forks shale plays in North Dakota. Its gathering systems connect Chevron and third-party wells to gas plants, terminals and other pipelines. Substantially all of Chevron’s existing and future owned or controlled Bakken production is dedicated under the commercial agreements.
Downstream connections give customers several ways to move products. The Ramberg Terminal Facility sends crude oil toward the Tioga Rail Terminal or into interstate pipelines. The rail terminal can send crude oil to delivery points on the East, West and Gulf coasts of the United States, while NGLs can be transported to points in North America.
Outside North Dakota, the Mentor Storage Terminal in Minnesota stores propane received by rail. Chevron uses the terminal to manage seasonal changes in propane demand, generally filling the cavern in warmer months and drawing it down in colder months.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Gathering Opco | $870.6 million | 53.7% | 8.95% |
| Processing and Storage | $620.0 million | 38.2% | 7.32% |
| Terminaling and Export | $130.7 million | 8.06% | 10.1% |
Suppliers and costs
Hess Midstream operates pipelines, compressors, processing plants, terminals, storage and disposal facilities rather than a conventional manufacturing business. Its operations also depend on connections to third-party pipelines, railroads, terminals and other delivery systems. Targa Resources operates the Little Missouri 4 gas processing plant, in which Hess Midstream owns an interest.
Operating costs include expenses for running and maintaining the infrastructure. The company also reimburses Chevron for operating and general and administrative expenses, without caps or other limits on those reimbursements. Some workers are seconded from Chevron, and worker safety requirements apply to them.
Capital expenditures are needed for projects and facilities. Some commercial agreements permit annual fee adjustments based on updated estimates of cumulative volumes and capital and operating expenditures. For the systems that have moved into their secondary contract terms, most fees are instead adjusted annually for inflation. Debt also requires interest payments, reducing cash available for operations, future opportunities or distributions.
- Revenue$1.6B
- Selling, general and administrative−$399.1M
- Other operating costs−$214.1M
- Operating income$1.0B
Competitive position
Hess Midstream operates in a competitive midstream industry. Other providers can compete to gather, process, transport, store or terminal oil, gas and NGLs in its geographic markets. The company does not identify specific competing midstream providers by name.
Hess Midstream believes its commercial agreements and direct connections to Chevron’s Williston Basin production limit competition for services related to Chevron’s Bakken operations. Chevron has dedicated substantially all of its existing and future owned or controlled Bakken production under those agreements. The company also handles volumes from other producers and seeks additional third-party business.
Our reading: The Chevron agreements and physical connections are a source of protection against competitors seeking that dedicated business, although they tie the strength of that position to one customer’s production. The integrated network of gathering systems, processing plants and terminal connections gives the company another foothold with producers needing several services; the available evidence does not establish its market share or the cost for a customer to switch providers.
Competition also affects the company indirectly. If Chevron’s customers reduce purchases because less expensive products are available elsewhere, Chevron may deliver only its minimum committed volumes or pay shortfall fees, which could decrease Hess Midstream’s revenue.
Growth opportunities
Hess Midstream’s strategy is to grow its business and available cash through fee-based contracts, support for Chevron’s Bakken production, additional third-party volumes and potential acquisitions. The company says most of the infrastructure needed for Chevron’s current and future drilling and production plans is already in place, requiring relatively limited incremental capital investment.
The company and Chevron are pursuing relationships with third-party producers and midstream companies operating in the Bakken to increase utilization of the existing asset base. Hess Midstream also evaluates potential acquisitions of complementary midstream assets from Chevron and third parties.
Compression capacity is one area of investment. Hess Midstream added approximately 20 MMcf/d of net compression capacity in 2025. An additional compressor station entered service in early 2026 and increased capacity by approximately 50 MMcf/d. The company says its gas gathering system can also be expanded by installing more compression equipment.
It was reported on 25 October 2026 that Chevron extended its commitment to use Hess Midstream infrastructure from 2033 to 2045 and that a transfer of Denver Julesburg Basin energy storage assets broadened Hess Midstream’s geographic footprint. The company’s commercial agreements also use rolling development-plan nominations to set minimum volume commitments.
- $1.2BFY2021
- $1.3BFY2022
- $1.3BFY2023
- $1.5BFY2024
- $1.6BFY2025
Structural risks
- Chevron dependence: Chevron accounts for substantially all revenue. Changes in its production, drilling activity, costs or ability to operate in the Bakken can affect the volumes Hess Midstream handles. Chevron can meet only its minimum commitments or pay shortfall fees if volumes decline.
- Geographic and operating exposure: Lower volumes in the company’s limited geographic area, including from competition or seasonal weather, can hurt the business. Pipelines, facilities and rail cars face risks including mechanical failures, power disruptions, fires, spills and severe weather.
- Third-party connections: Damage to or loss of connecting pipelines, railroads, terminals and other delivery systems can disrupt service. Rail disruptions can also affect customers’ ability to move their products.
- Debt and distributions: Debt can limit financial flexibility and require cash for interest payments. The company may not generate enough available cash to support the minimum quarterly distribution.
- Regulation and environmental costs: Environmental, health, safety and pipeline rules can require substantial spending. Changes in regulatory classification or the loss of existing waivers could increase costs or reduce revenue. Additional rail rules could increase compliance costs or reduce demand for services.
Bottom line
Our reading
Our reading: Hess Midstream is an infrastructure business whose fees and minimum-volume arrangements provide a contractual basis for recurring revenue, while its connected assets support services from the well through to export routes. That model depends heavily on Chevron and Bakken activity, and the commitments do not eliminate exposure to lower volumes, operating disruptions, debt costs or regulation.