Hess Midstream LP Dossier
Qualitative Analysis
Business overview
Hess Midstream LP (HESM) is a fee-based, growth-oriented midstream energy company that owns, operates, develops, and acquires a diverse set of midstream assets. The company primarily provides services to Chevron Corporation (which became its direct sponsor following the Chevron-Hess merger completed in mid-2025) and other third-party customers. HESM's operations are strategically located in the Bakken and Three Forks Shale plays within the Williston Basin of North Dakota. The business is organized into three core operating segments: Gathering (natural gas, crude oil, and produced water pipelines), Processing and Storage (including the Tioga Gas Plant and Mentor Storage Cavern), and Terminaling and Export (including rail terminals and pipeline header systems).
Research as of 19 Jun 2026
Strategic Initiatives
Growth programs, investments, and their expected impact
Following the completion of its planned multiyear infrastructure project buildout in 2025, Hess Midstream is optimizing its capital program. It reduced its 2026 capital expenditure guidance by one-third, leveraging efficiencies from Chevron's longer lateral wells and the completion of its second compressor station.
Expected impact: Substantially lower capital spending, driving a 20% year-over-year increase in Adjusted Free Cash Flow at the midpoint to a range of $910 million to $960 million in 2026.
Prioritizing return of capital to shareholders through a combination of consistent quarterly distribution increases and opportunistic share and unit repurchases.
Expected impact: Targeting annual distribution growth per Class A share of at least 5% through 2028, supported by growing free cash flow and minimum volume commitments.
Mergers, Acquisitions & Partnerships
Recent deals and strategic collaborations
Strategic Partnerships
Following Chevron's acquisition of Hess Corporation on July 18, 2025, Chevron became the direct parent of Hess and indirectly owns an approximately 37.9% consolidated interest in Hess Midstream. Chevron acts as the primary sponsor and customer, with long-term commercial contracts and minimum volume commitments (MVCs) extending through 2033.
Terms: Commercial contracts include annual tariff rate increases based on CPI inflation escalation (capped at 3% annually) and MVCs that provide a revenue floor.