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Hess Midstream Partners NYSE: HESM reported higher second-quarter net income and adjusted EBITDA, supported by lower operating expenses and general and administrative savings, while reaffirming its full-year financial outlook and plans for shareholder returns and debt reduction.
Net income for the second quarter of 2026 was $174 million, compared with about $158 million in the first quarter, while adjusted EBITDA rose to $314 million from $300 million. Chief Financial Officer Mike Chadwick said the increase primarily reflected operating activity that shifted into the second half of the year, as well as lower G&A allocations.
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Revenue excluding pass-through revenue increased by about $10 million sequentially. Gathering revenue rose approximately $7 million, and processing revenue increased approximately $3 million, Chadwick said.
Operations and Volume Outlook Chief Executive Officer Jonathan Stein said the company completed planned maintenance at TGP on time and under budget during the quarter. Hess Midstream plans maintenance at LM4 in the third quarter and expects to complete work that had shifted from the first half into the latter half of the year.
Second-quarter throughput averaged 433 million cubic feet per day for gas processing, 117,000 barrels of oil per day for crude terminaling, and 121,000 barrels of water per day for water gathering. Compared with the first quarter, oil-related volumes were flat to lower, while gas volumes increased as additional third-party volumes helped offset the impact of TGP maintenance, Stein said.
The company continues to expect higher volumes in the second half of 2026 than in the first half. Stein said the anticipated increase reflects the normal timing of wells coming online as Chevron optimizes its drilling program, along with longer laterals and greater productivity discussed by Chevron.
“The volume growth that we had was really planned and just part of normal phasing,” Stein said. He added that the company expects continued quarter-over-quarter volume growth, including at least 5% growth into the second half of the year.
Stein said Chevron’s efficiency gains in the basin have helped maintain production at lower rig counts. From Hess Midstream’s perspective, longer laterals can allow similar throughput volumes to be handled with fewer wells, supporting capital efficiency. He said the company is not assuming production growth beyond the production expectations previously discussed by Chevron, with future growth drivers expected to include inflation-based tariff escalation and operating-cost savings.
Margins, Capital Spending and Third-Quarter View Hess Midstream’s gross adjusted EBITDA margin was approximately 85% in the second quarter, above its long-term 75% target. Chadwick said the margin benefited in part from relatively minor credits recorded during the quarter, but that the larger factor was the phasing of operating expenses into the third and fourth quarters.
While the company has maintained margins above 80% for an extended period, Chadwick said management remains comfortable retaining the 75% long-term margin target rather than changing its guidance.
Capital expenditures totaled approximately $31 million in the second quarter, including the completion of greenfield high-pressure gathering pipeline infrastructure. The company expects spending to increase in the third quarter as planned activity rises.
For the third quarter, Hess Midstream expects net income of approximately $165 million to $175 million and adjusted EBITDA of $310 million to $320 million. The midpoint of the EBITDA outlook is roughly flat with the second quarter, as higher projected revenue and volumes are expected to be offset by higher operating expenses, including deferred maintenance work.
Adjusted free cash flow is expected to decline sequentially in the third quarter because of higher capital expenditures, Chadwick said.
Full-Year Guidance and Capital Allocation The company reiterated its 2026 outlook for net income of $650 million to $700 million and adjusted EBITDA of $1.225 billion to $1.275 billion, with the EBITDA midpoint approximately flat compared with 2025. It also maintained adjusted free cash flow guidance of $910 million to $960 million, representing a 20% year-over-year increase at the midpoint, according to Stein.
Chadwick said the range of potential outcomes for full-year EBITDA will depend largely on weather and maintenance execution. Favorable weather and continued successful maintenance execution could support results toward the higher end of the range, while operational interruptions or higher maintenance costs could pressure results.
Second-quarter adjusted free cash flow was approximately $232 million, down about 2% from the first quarter. Net interest expense, excluding amortization of deferred financing costs, was approximately $51 million. The revolving credit facility balance was $256 million at quarter-end, down approximately $87 million from the first quarter. After funding its targeted 5% annual distribution growth, Hess Midstream expects approximately $280 million of excess adjusted free cash flow in 2026. The company plans to use that cash for incremental shareholder returns and debt repayment.
Chadwick said the board will continue to evaluate the mix of share repurchases and debt reduction during the year. The company repurchased $60 million of shares from public holders and its sponsor in March, while second-quarter capital allocation included the $87 million reduction in revolver borrowings.
Hess Midstream was at roughly 3 times leverage during the quarter and expects that ratio to decline as debt is reduced and EBITDA increases. Chadwick said the company’s outlook indicates leverage could reach about 2.5 times by 2028, though management does not expect it to move materially below that level.
About Hess Midstream Partners (NYSE:HESM)Hess Midstream Partners LP, formerly traded on the New York Stock Exchange under the ticker HESM, is a midstream energy partnership that owns, operates and develops crude oil, natural gas and produced water infrastructure in the Williston Basin. The company’s assets include crude oil gathering and transportation systems, saltwater disposal wells, natural gas processing and fractionation plants, and associated pipeline and storage facilities. Its integrated network is designed to support upstream production by providing gathering, processing, storage and marketing services for hydrocarbons and produced water.
Headquartered in Houston, Texas, Hess Midstream Partners primarily serves producers operating in North Dakota and Montana’s Bakken Shale region.
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