Hess Midstream LP (NYSE:HESM) on Thursday, cut its financial and operational outlook for the coming years, citing a slowdown in drilling activity by Chevron Corp (NYSE:CVX) in the Bakken beginning in the fourth quarter of 2025.
While oil volumes are projected to level off, the company sees gas throughput growth supporting earnings and capital returns to investors through 2027.
The partnership now anticipates that Chevron will reduce its rig count in the Bakken from four to three in the fourth quarter of 2025.
As a result, Hess Midstream expects oil throughput volumes to plateau in 2026. In contrast, gas throughput is forecast to expand through at least 2027, ensuring volume levels remain above established minimum commitments.
Despite this shift, management emphasized financial stability.
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Chief Executive Officer Jonathan Stein said the company remains focused on generating consistent cash flow and maintaining balance sheet strength, which underpins its capital return framework.
Adjusted EBITDA for 2026 is now projected to be flat compared with 2025. Growth is expected to resume in 2027, driven by increasing gas volumes and inflation-linked provisions built into its commercial contracts.
The company reiterated its long-term leverage target of three times Adjusted EBITDA.
Capital spending will also be lower than initially planned. Hess Midstream removed the Capa gas plant project from its forward plan and suspended early engineering work, resulting in significantly reduced expenditures in 2026 and 2027.
Lower spending combined with EBITDA growth in 2027 is expected to translate into higher adjusted free cash flow.
That supports Hess Midstream's ongoing return-of-capital strategy, including targeted annual distribution growth of at least 5% through 2027. Management also highlighted flexibility for potential share repurchases as part of incremental shareholder returns.
For 2025, Hess Midstream cut its full-year gas throughput guidance due to adverse weather, scheduled maintenance, and reduced third-party volumes in the back half of the year.
Gas gathering volumes are now expected to average between 455 and 465 million cubic feet (MMcf) per day, while gas processing volumes are projected between 440 and 450 MMcf per day.
Earlier, the company expected the 2025 gas gathering to be 475-485 MMcf of natural gas per day and gas processing to be 455-465 MMcf.
Third-quarter 2025 net income and Adjusted EBITDA are anticipated at the lower end of prior guidance, with full-year figures landing in the lower half of the previously announced range.
HESM Price Action: Hess Midstream shares were down 7.96% at $36.33 at the time of publication on Friday. The stock is trading within its 52-week range of $33.59 to $44.14, according to Benzinga Pro data.
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