8-K: Hess Midstream LP Q1 2026 Earnings and Guidance Update

Hess Midstream LP reported first quarter 2026 results, including $157.7 million in net income and $299.8 million in Adjusted EBITDA, while also updating its 2026 capital expenditure and Adjusted Free Cash Flow guidance.

Summary

• Hess Midstream LP reported first quarter 2026 net income of $157.7 million, a slight decrease from $161.4 million in the prior-year quarter.
• Net income attributable to Hess Midstream LP was $87.6 million, or $0.68 per Class A share, up from $71.6 million ($0.65 per share) in Q1 2025.
• Adjusted EBITDA for the quarter was $299.8 million, an increase from $292.3 million in Q1 2025.
• Adjusted Free Cash Flow was $237.0 million, up from $190.7 million in Q1 2025.
• The company completed $42.0 million in Class A share repurchases and $18.0 million in Class B unit repurchases.
• Quarterly cash distribution was increased to $0.7792 per Class A share.
• Throughput volumes saw a decrease of 5% for oil terminaling and 9% for water gathering year-over-year, but a 1% increase for gas processing.
• 2026 capital expenditures guidance was reduced to approximately $105 million, and Adjusted Free Cash Flow guidance was increased to $910 - $960 million.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report due to increased cash flow guidance, share repurchases, and distribution growth, despite a slight dip in overall net income.

Positives

• Increased quarterly cash distribution to $0.7792 per Class A share.
• Completed accretive share and unit repurchases totaling $60.0 million.
• Increased full-year 2026 Adjusted Free Cash Flow guidance to $910 - $960 million.
• Reduced 2026 capital expenditures guidance to approximately $105 million.
• Reaffirmed full-year 2026 guidance for throughput, net income, and Adjusted EBITDA.
• Net income attributable to Hess Midstream LP increased to $87.6 million from $71.6 million in the prior year.
• Adjusted EBITDA increased to $299.8 million from $292.3 million in the prior year.
• Adjusted Free Cash Flow increased to $237.0 million from $190.7 million in the prior year.

Negatives

• Net income for the quarter decreased slightly to $157.7 million from $161.4 million in the prior-year quarter.
• Throughput volumes decreased 5% for oil terminaling and 9% for water gathering compared to the prior-year quarter, primarily due to lower production.
• Total operating costs and expenses increased to $152.0 million from $144.6 million, primarily due to higher depreciation expense.

Risks

• The ability of Chevron and other parties to satisfy their obligations, including meeting drilling and development plans and delivering nominated volumes.
• Reductions in the volumes of crude oil, natural gas, NGLs, and produced water gathered, processed, terminaled, or stored.
• Fluctuations in the prices and demand for crude oil, natural gas, and NGLs.
• Changes in global economic conditions and the effects of economic downturns or inflation.
• Ability to comply with government regulations and obtain or maintain necessary permits for capital projects.
• Costs or liabilities associated with federal, state, and local laws and regulations, including environmental protection and health and safety.
• Potential disruption or interruption of business due to natural and human causes, including accidents, severe weather, labor disputes, and cyber-attacks.
• Limitations on accessing debt or capital markets on acceptable terms.

Future Outlook

Hess Midstream LP is updating its 2026 capital expenditures guidance to approximately $105 million and increasing its Adjusted Free Cash Flow guidance to $910 - $960 million. The company is reaffirming its full-year 2026 guidance for throughput, net income, and Adjusted EBITDA. They expect to generate approximately $1 billion of Adjusted Free Cash Flow after Distributions through 2028, available for incremental shareholder returns and debt repayment.

Management Comments

• "We are focused on safe, reliable and efficient execution, and have lowered our expected capital spend for the year, supporting additional Adjusted Free Cash Flow for continued shareholder returns and debt repayment."
• Jonathan Stein, Chief Executive Officer of Hess Midstream.

Industry Context

StockSavvy.ai notes that Hess Midstream LP's Q1 2026 results and updated guidance reflect a strategic focus on capital discipline and shareholder returns within the midstream energy sector. The increase in Adjusted Free Cash Flow guidance, driven by lower capital expenditures and deferred tax payments, aligns with industry trends prioritizing cash generation and debt reduction.

Comparison to Industry Standards

• The Adjusted EBITDA margin of 83% (Revenues excluding pass-through) for Q1 2026 is slightly improved from 82% in Q1 2025, indicating operational efficiency.
• The company's stated goal of growing distributions by at least 5% per annum on a per Class A share basis is a common target for stable midstream entities seeking to attract income-focused investors.
• The reduction in capital expenditures to $105 million for 2026 is a significant decrease from prior periods, reflecting project completion and a focus on optimizing existing assets, a trend seen across the midstream sector seeking to improve free cash flow generation.

Stakeholder Impact

• Shareholders: Benefit from increased quarterly cash distribution and share repurchases, with future potential for incremental returns from free cash flow.
• Creditors: Benefit from the company's focus on debt repayment using free cash flow.
• Customers (Chevron and third parties): Continue to receive midstream services, with throughput volumes reflecting production levels.
• Employees: Continued focus on safe and efficient operations.

Next Steps

• Continue to execute on operational priorities and financial strategy.
• Focus on safe, reliable, and efficient operations.
• Utilize additional Adjusted Free Cash Flow for continued shareholder returns and debt repayment.
• Targeted growth in distributions by at least 5% per annum on a distribution per Class A share basis.

Key Dates

Recommendation

The filing shows solid operational performance and positive adjustments to future cash flow guidance, supporting continued distributions and share repurchases. However, the slight year-over-year decrease in net income and the decrease in oil and water throughput volumes warrant a 'hold' recommendation pending further clarity on production trends and the impact of Chevron's drilling activities.

Keywords

Hess Midstream LP, HESM, Q1 2026 Earnings, Adjusted EBITDA, Adjusted Free Cash Flow, Capital Expenditures, Share Repurchase, Cash Distribution