Hess Midstream Partners Q2 2025 Earnings Report

Hess Midstream Partners EPS Results

• Actual EPS: $0.74
• Consensus EPS: $0.56
• Beat/Miss: Beat by +$0.18
• One Year Ago EPS: $0.59

Hess Midstream Partners Revenue Results

• Actual Revenue: $414.20 million
• Expected Revenue: $405.08 million
• Beat/Miss: Beat by +$9.12 million
• YoY Revenue Growth: +13.30%

Hess Midstream Partners Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 12:00PM ET

Hess Midstream LP owns, develops, operates, and acquires midstream assets and provide fee-based services to Hess and third-party customers in the United States. It operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression systems; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,410 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 660 million cubic feet per day; crude oil gathering system comprises approximately 570 miles of crude oil gathering pipelines; and produced water gathering system that includes approximately 300 miles of pipelines in gathering systems. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; crude oil rail cars; and other Dakota access pipeline connections, as well as Johnson's Corner Header System, a crude oil pipeline header system. Hess Midstream LP was founded in 2014 and is based in Houston, Texas.

Hess Midstream Partners Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Hess Midstream delivered record operating performance in Q2, with gas processing and oil terminalling volumes rising by ~6% and ~10%, and reaffirmed ~10% throughput growth guidance for 2025 vs 2024.
• Positive Sentiment: Adjusted EBITDA for Q2 rose to $316 million (an ~8% increase from Q1) at an ~80% margin, supporting full-year 2025 guidance of $1.235–1.285 billion (~11% y/y growth).
• Positive Sentiment: Q2 adjusted free cash flow was ~$194 million, and 2025 FCF is expected at $725–775 million, covering the targeted 5% distribution increase with ~$125 million excess; the company has returned >$2 billion to shareholders since 2021 and holds ~$1.25 billion in financial flexibility.
• Neutral Sentiment: Full-year 2025 capital expenditures remain at ~$300 million to complete two new compressor stations and progress the Capa gas plant under its disciplined investment program.
• Negative Sentiment: Q3 and Q4 guidance includes seasonally higher maintenance costs and a winter weather contingency that could partially offset volume-driven revenue gains.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the Second Quarter twenty twenty five Hess Midstream Conference Call. My name is Gigi, and I'll be your operator for today. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded for replay purposes.

[Operator]

I would now like to turn the conference over to Jennifer Gordon, Vice President of Investor Relations. Please proceed.

[Jennifer Gordon, Director of Investor Relations at Hess Midstream]

Thank you, Gigi. Good afternoon, everyone, and thank you for participating in our second quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com.

[Jennifer Gordon, Director of Investor Relations at Hess Midstream]

Today's conference call contains projections and other forward looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factors section of Hess Midstream's filings with the SEC. Also, on today's conference call, we may discuss certain GAAP financial measures. A reconciliation of the differences between these non GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release.

[Jennifer Gordon, Director of Investor Relations at Hess Midstream]

With me today are Jonathan Stein, Chief Executive Officer John Gatling, President and Chief Operating Officer and Mike Chadwick, Chief Financial Officer. I'll now turn the call over to Jonathan Stein.

[Jonathan Stein, CEO at Hess Midstream]

Thanks, Jennifer. Welcome everyone to our second quarter twenty twenty five earnings call. I have a few opening comments and I will hand the call over to John Gatling to review our operations and Mike Chajuk to review our financials. I wanted to first say that we are all excited and eager to work together with our new Chevron colleagues to continue to drive value for our shareholders. Our new board members, including our new chair, Andy Walls, Chevron's President of Downstream, Midstream and Chemicals, have significant experience across the upstream, midstream and downstream businesses and complement the operational and financial expertise of our current board members.

[Jonathan Stein, CEO at Hess Midstream]

I am also excited to welcome Mike Chadwick to his new role as Chief Financial Officer of Hess Midstream. I've worked alongside Mike for the past twenty years as he's progressed through various financial roles at Hess Corporation and we are fortunate to have his experience and leadership capabilities working with the Midstream. I am also excited to step into my new role as CEO of Hess Midstream. Since our IPO, we have created value for shareholders through operational excellence and execution that drives a visible trajectory of growth and supported by a financial strategy that includes a differentiated combination of balance sheet strength and a priority on shareholder return. With the continuity of the Midstream team in place, we are excited to take this strategy forward as we continue to build Hess Midstream with a unique combination of sector leading growth and shareholder returns.

[Jonathan Stein, CEO at Hess Midstream]

Today, I want to focus briefly on three themes. First, we continue to deliver outstanding operational performance, which you can see reflected in the quarter that we reported today and also in our fourth annual sustainability report, which we issued a few weeks ago and which highlights our commitment and track record of safe and reliable execution. In the second quarter, throughputs increased across all segments and we are in line with our annual guidance for volumes to grow by approximately 10% across all oil and gas systems in 2025 compared with 2024. Second, we continue to deliver outstanding financial performance. We are estimating an approximate 11% increase in adjusted EBITDA growth in 2025 with approximately 7% growth at the midpoint in the second half of the year.

[Jonathan Stein, CEO at Hess Midstream]

With total expected capital expenditures of approximately $300,000,000 we expect to generate adjusted free cash flow of approximately $725,000,000 to $775,000,000 which more than covers our targeted 5% annual distribution growth and generates excess free cash flow. And third, we are committed to our ongoing financial strategy, which prioritizes return of capital to our shareholders and has made Hess Midstream's total shareholder return yield one of the highest of our Midstream peers, while also maintaining one of the lowest leverage ratios. Highlighting our balance sheet strength, last week Hess Midstream senior unsecured debt was upgraded by S and P to an investment grade rating of BBB- following the close of the Chevron Hess merger. Since 2021, we have returned greater than $2,000,000,000 to shareholders through accretive repurchases and have increased our distribution per Class A share by more than 60% through 5% targeted annual distribution growth and distribution level increases following each share repurchase transaction. We expect to generate greater than $1,250,000,000 of financial flexibility through 2027 for incremental shareholder returns, including the potential for further unit and share repurchases over this period.

[Jonathan Stein, CEO at Hess Midstream]

With a consistent strategy at Hess Midstream, we are excited for the future. We have a visible trajectory of growth that underpins our unique and differentiated financial strategy with a continued focus on consistent and ongoing return of capital to our shareholders. With that, I'll hand the call over to John to review our operational performance for the second quarter.

[John Gatling, President & COO at Hess Midstream]

Thanks, Jonathan. Today, I'll discuss our second quarter performance, then Mike will review our financial results and guidance. In the second quarter, Hess Midstream delivered record operating performance. Throughput volumes averaged four forty nine million cubic foot per day for gas processing, 137,000 barrels of oil per day for crude terminaling, and 138,000 barrels of water per day for water gathering. Throughputs increased across all segments of our business, with gas processing and oil terminalling volumes increasing by approximately six percent and ten percent, respectively, from the first quarter, primarily driven by outstanding upstream production performance and high midstream system availability.

[John Gatling, President & COO at Hess Midstream]

Turning to Hess Midstream guidance. We're again reaffirming our previously announced full year 2025 oil and gas throughput guidance. In the third quarter, we expect volume growth from the second quarter across our oil and gas systems, partially offset by higher seasonal maintenance activity. Turning to Hess Midstream's capital program. Our multiyear projects continue as planned.

[John Gatling, President & COO at Hess Midstream]

In 2025, we remain focused on the completion of two new compressor stations and associated gathering systems, as well as continuing to progress the Capa gas plant. Full year 2025 capital expenditures remain unchanged and are expected to total approximately $300,000,000 In summary, we remain focused on executing our strategy of disciplined, low risk investments to meet basin demand while maintaining reliable operations and strong financial performance. We expect our growth strategy to generate sustainable cash flow and create opportunities to return capital to our shareholders. I'll now turn the call over to Mike to review our financial results and guidance.

[Michael Chadwick, CFO at Hess Midstream]

Thanks, John, and good afternoon, everyone. I wanted to say first that I'm really excited to join the Hess Midstream team and look forward to meeting you in the future. Today, I'm going to review our results for the second quarter and our financial guidance, and then we will open the call for questions. For the 2025, net income was 180,000,000 compared to $161,000,000 for the first quarter. Adjusted EBITDA for the 2025 was $316,000,000 compared to $292,000,000 for the first quarter.

[Michael Chadwick, CFO at Hess Midstream]

The increase in adjusted EBITDA relative to the first quarter was primarily attributable to the following: Total revenues, excluding pass through revenues, increased by approximately 30,000,000 primarily driven by higher throughput volumes, resulting in segment revenue changes as follows: Gathering revenues increased by approximately $16,000,000 Processing revenues increased by approximately 9,000,000 Terminaling revenues increased by approximately $4,000,000 and third party services and other income increased by approximately $1,000,000 Total costs and expenses, excluding depreciation and amortization, pass through costs, and net of our proportional share of LM4 earnings, increased by approximately $6,000,000 primarily from higher seasonal maintenance activity and third party processing fees. This resulted in adjusted EBITDA for the 2025 of $316,000,000 Our gross adjusted EBITDA margin for the second quarter was maintained at approximately 80%, above our 75% target, highlighting our continued strong operating leverage. Second quarter capital expenditures were approximately $70,000,000 and net interest, excluding amortization of deferred finance costs, was approximately $52,000,000 resulting in adjusted free cash flow of approximately $194,000,000 We had a drawn balance of $273,000,000 on our revolving credit facility at quarter end. In January, we announced that we are targeting annual distribution per Class A share growth of at least 5% through 2027, which is supported by our existing MVCs.

[Michael Chadwick, CFO at Hess Midstream]

This week, we announced our second quarter distribution that included our targeted 5% annual growth per Class A share and an additional increase utilizing the excess adjusted free cash flow available for distributions following the repurchase. Turning to guidance. For the 2025, we expect net income to be approximately $175,000,000 to $185,000,000 and adjusted EBITDA to be approximately $315,000,000 to $325,000,000 reflecting higher volumes and revenues partially offset by seasonally higher maintenance costs. We also expect CapEx to increase in the third quarter, consistent with seasonally higher activity levels. For the full year 2025, we are updating net income and adjusted free cash flow guidance to include the impact of an incremental $15,000,000 in expected interest expense, mainly on higher debt balance following the repurchase transactions completed so far this year.

[Michael Chadwick, CFO at Hess Midstream]

The updated net income guidance also includes the impact of an incremental $15,000,000 in expected income tax expense resulting from ownership changes following the previously completed secondary equity offerings and repurchase transactions. As a result, we now expect net income of $685,000,000 to $735,000,000 We are maintaining our adjusted EBITDA guidance range of $1,235,000,000 to 1,285,000,000.000 implying growth of approximately 707% in adjusted EBITDA at the midpoint in the second half of the year. With total expected capital expenditures of approximately $300,000,000 we now expect to generate adjusted free cash flow of approximately $725,000,000 to $775,000,000 With distributions per Class A share targeted to grow at least 5% annually from the new higher distribution level, we expect excess adjusted free cash flow of approximately 125,000,000 after fully funding our targeted growing distributions. We continue to have more than $1,250,000,000 of financial flexibility through 2027 that can be used for continued execution of our return of capital framework, including potential ongoing unit and share repurchases. This concludes my remarks.

[Michael Chadwick, CFO at Hess Midstream]

We will be happy to answer any questions, and I will now turn the call over to the operator.

[Operator]

Thank you.

[Operator]

Our first question comes from the line of Jeremy Tonet from JPMorgan Securities LLC.

[Analyst]

Hey. Good morning. This is, Rothenreddy on for Jeremy. I wanted to start off with the Hess deal now closed. If you guys have any insight into Chevron's view on the Bakken and whether the rig count there could change?

[Analyst]

And if there were to be change, could you remind us on the sensitivity to Hessam in terms of the EBITDA growth you guys have laid out and the expectation for higher volumes across the systems in 2026 and 2027?

[John Gatling, President & COO at Hess Midstream]

Yeah, maybe I'll touch on it and then Jonathan and Mike can hit it as well. But just from our perspective, we're currently running four rigs. We've seen very strong upstream performance, well delivery with our increased laterals. The midstream availability has just been phenomenal. We'll continue to execute strongly and stay focused on that.

[John Gatling, President & COO at Hess Midstream]

As we do every year, we'll update our development plan as we get an update with Chevron coming in as our sponsor. That'll happen towards the end of the year, then we'll be issuing guidance in January.

[Analyst]

Got it. You. Then turning to capital allocation, wondering if you could talk a little bit specifically about your appetite for buybacks at current prices. And with GIP sell down now complete, if we should think about any change in the magnitude of repurchases going forward?

[Michael Chadwick, CFO at Hess Midstream]

Yeah. So with buybacks, as we announced in January, we have about 1,250,000,000.00 of financial flexibility through 2027, and we expect to do multiple repurchases a year as we've done in the past. So there's no change to that guidance. As we previously mentioned, our January repurchase that was in lieu of not having completed a repurchase in q four of last year. Our May repurchase of 200,000,000, which included the public for the first time, that got us back into our cadence of about a 100,000,000 every quarter.

[Michael Chadwick, CFO at Hess Midstream]

However, the size of that is not set in stone. But generally, 100,000,000 a quarter is is what we will be completing as we have done over the last couple of years.

[Jonathan Stein, CEO at Hess Midstream]

And this is Jonathan. You know, as we said at the beginning, as I said in my comments, you know, overall, there's no change to our strategy, in terms of our business strategy and to our financial strategy. And you saw that, just this week, we issued, as Mike said, our quarterly dividend announcement on Monday night that included our distribution level increase as well as the $200,000,000 increase following the $200,000,000 share buyback that we did earlier. So really no change in our return on capital program going forward. You mentioned GIP.

[Jonathan Stein, CEO at Hess Midstream]

Obviously, GIP out in terms of secondaries, that's not something that we expect. But in terms of return on capital, is really always focused on that framework that continues as is.

[Analyst]

Makes sense. Thank you, guys.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Samuya Jain from UBS.

[Saumya Jain, Equity Research Associate at UBS Group]

Hi, good afternoon. Congrats on the quarter. I was wondering how are you guys seeing GORs trending in the near term? And along with that, what's your outlook on the Bakken heading into

[John Gatling, President & COO at Hess Midstream]

matures over the longer term, GORs are expected to increase, which they're acting exactly as we would expect them to. Looking at the North Dakota Pipeline Authority, Justin Crinstead and the team there are kinda looking at longer term basin growth in the gas space. And, it is anticipated that Bakken gas is gonna grow over the long term. And, we would expect the Hess and Chevron Bakken volumes to basically do the same, trend the same way. So, we're expecting oil to remain in the pipeline authorities forecast.

[John Gatling, President & COO at Hess Midstream]

They're expecting oil to remain flattish with gas growing over the longer term.

[Saumya Jain, Equity Research Associate at UBS Group]

Got it. Thank you. And then could you detail where gas processing volumes are at now over the past month? Any changes to note? Just trying to understand the cadence and same with oil terminalling.

[John Gatling, President & COO at Hess Midstream]

Yeah, think generally speaking, we've seen and expect to continue to see the growth through the end of the year, as our guidance has supported that. So, again, we had a very, very strong second quarter. We do continue to expect to see growth into the third and fourth quarters and finish the year, at guidance. So, I would say you would continue to see that growth through 2627 as the MVCs have kind of outlined. And again, if there's any changes to the development plan, that'll happen as part of our normal annual development process, and that'll be updated in January.

[Saumya Jain, Equity Research Associate at UBS Group]

Got it. Thank you.

[John Gatling, President & COO at Hess Midstream]

Yeah. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Doug Irwin from Citi.

[Doug Irwin, Vice President at Citi]

Thanks for the question. Congrats, Jonathan and Mike on the new roles as well. I just want to start with the guidance range here. If I just take the first half of guidance, first half twenty five guidance, just in the aggregate, I think you're turning about $15,000,000 above the guided midpoint here year to date and now third quarter is pointing to a bit more growth from here. I guess is it fair to say you're turning above the annual midpoint at this point?

[Doug Irwin, Vice President at Citi]

Or there may be some variances versus your initial outlook that is kind of shifted around the timing throughout the year here versus your initial second half expectations?

[John Gatling, President & COO at Hess Midstream]

Maybe I'll touch on the operational side and then can hand it over to Mike and Jonathan. But overall, again, we had an extremely strong second quarter, very little weather impact, essentially no maintenance activity. You know, coming out of the first quarter, which was a bit more challenging, you know, we were really just trying to stabilize operations, I think we were very pleased with how both the the upstream performed, but also how the midstream performed. You know, we're gonna continue to see that growth going into the third and fourth quarters, but, you know, as we transition in, we are expecting to see a little bit more maintenance in the second half of the year. And that'll probably be kind of in the later part of the year.

[John Gatling, President & COO at Hess Midstream]

We're still kind of planning all of the activity, but there's still some room there. And we're again, I think we're still very comfortable with the guidance that we've got currently.

[Michael Chadwick, CFO at Hess Midstream]

Yeah. Thanks, John. And I'll just tag on the back of that. As we have seen, we're keeping our adjusted EBITDA guidance for the year, which already includes quite a lot of growth baked into the second half. As Jonathan said and I said in my notes, taking the midpoint of our full year guidance, we expect about 7% higher EBITDA in the second half of the year compared to the first half.

[Michael Chadwick, CFO at Hess Midstream]

And so while revenues are expected to grow on higher volumes, as John described, you know, phasing of maintenance costs means expenses are expected to be higher in q three, and we also retained some winter weather contingency in q four. And while winter weather can also lower maintenance costs, q four also typically sees some variability in our allocation costs. So we're keeping guidance there for the second quarter.

[Doug Irwin, Vice President at Citi]

Okay. That's helpful. Thank you. And then maybe another on buybacks, just asking a slightly different way. It's obviously early on in the relationship with Chevron here.

[Doug Irwin, Vice President at Citi]

I'm just curious if you expect them to participate in buybacks kind of similar to how HES did or will buybacks moving forward pretty much be entirely dependent on buying back shares from public owners? And to the extent that you are buying back more public shares, does just general liquidity of those public shares impact kind of your ability to to maintain the run rate kind of in as smooth of a cadence as you have in the past?

[Jonathan Stein, CEO at Hess Midstream]

Sure. This is Jonathan. Yeah. Look. There's no change.

[Jonathan Stein, CEO at Hess Midstream]

As we had said in the past, when we had secondaries and buybacks happening simultaneously, were really two separate objectives. While the secondaries were changing ownership level, the buyback program is really just a return of capital program. And so you would expect over time that we'll have the same participation more closer to the relative proportional levels of the public and Chevron going forward. So really no change to our approach there. We did include as you know now we have the kind of road tested, I'll call it, or use, the ASR process last time to include the public in our buyback program and, you know, have that mechanism available for us to be able to do that going forward as well.

[Jonathan Stein, CEO at Hess Midstream]

So really no change there. And in terms of our liquidity, I think you've seen that our liquidity has continued to increase as we did all those the secondary transactions and the public ownership went up. Our, you know, our liquidity at this point and average trading volume is, you know, more than sufficient to handle our our buyback program at the level that we've done in the past than expected to going forward.

[Doug Irwin, Vice President at Citi]

Great. That's all for me. Thanks, Sean.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Praneeth Satish from Wells Fargo.

[Praneeth Satish, Analyst at Wells Fargo]

Thanks. Good afternoon. Also congrats, Jonathan and Michael, on the new roles. Maybe can you just provide any more context around GIP's decision to exit its investment in Hess Midstream back in May? I mean, I know they were selling down their stakes, so it wasn't really a surprise.

[Praneeth Satish, Analyst at Wells Fargo]

But I I guess why do it in May versus, maybe after the merger with Chevron?

[Jonathan Stein, CEO at Hess Midstream]

Sure. So, you know, as you know, we've over the past, you know, three years plus, we've been, executing secondaries in a very disciplined fashion, each one increasing in size generally over time and with increasingly tighter discounts. So very disciplined approach. GIP saw an opportunity as we'd always said. The secondaries were based on demand from investors and then GIP would assess that relative to their value proposition expectations and that opportunity existed in May.

[Jonathan Stein, CEO at Hess Midstream]

And so they continued taking that opportunity. They, of course, have their own investors and timeline and really executing relative to demand and their expectations really independent of at that point, any potential merger timing. Really just continuing the disciplined execution that we had had in the past and opportunity presented itself.

[Praneeth Satish, Analyst at Wells Fargo]

Got it. And then maybe as a follow-up, guess, right or wrong, you know, some investors have viewed GIP as as providing an an independent voice that kind of helped balance the sponsor interests with those of the public. So I guess with GIP now out, how do you think about the new governance structure versus having that third party institutional investor at the table?

[Jonathan Stein, CEO at Hess Midstream]

Sure. Yeah, no, we agree that one of our differentiating strengths relative to other sponsored midstream companies has been our balanced governance and certainly with GIP, historically part of the board that provided some level of that. So consistent with that approach, as you saw, we updated our governance in June following the GIP's exit. And that included that certain key decisions require the approval of one independent director. That includes things like leverage above a certain level, issuing equity or major capital decision among other key strategic decisions.

[Jonathan Stein, CEO at Hess Midstream]

That mechanism is now in place. As you know, we're adding also a fourth independent board member. But this mechanism is in place independent of the number of board members at the time or the timing of the fourth independent member joining the board. So I think it really highlights our continued belief in the value of a balanced government model that we've had historically and then with this new mechanism in place that we will continue to have going forward.

[Praneeth Satish, Analyst at Wells Fargo]

Got it. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of John McKay from Goldman Sachs.

[John Mackay, VP - Equity Research at Goldman Sachs]

Hey, everyone. Thanks for the time. I wanted to pick up a little bit more on the Chevron side. I totally understand it's early and you'll have your annual review of activity levels later in the year. But Hess has been talking about this kind of 200 kboe a day target for a long time.

[John Mackay, VP - Equity Research at Goldman Sachs]

I think we've kind of thought about that as the reasonable run rate for the footprint. Could you maybe just acknowledging that can, I guess, change, but can you maybe just remind us kind of how that 200 a day level was set, kind of what the thought process behind it was? And then maybe from that, any read on why that might be the right level going forward?

[John Gatling, President & COO at Hess Midstream]

Again, think as we think about the 200,000 barrels a day, it was really kind of hitting the over 100,000 barrels a day of of gross oil or of net oil, and then the the gas growth over time. And as we've been doing just from a overall field development pamper plan perspective, is we've really been trying to optimize the upstream drilling activity with the midstream infrastructure plan. And so, it's it's really about having the infrastructure in place and then keeping that infrastructure as utilized as it possibly can be. And so, when we looked at the build over time and looked at the infrastructure development and kind of where we felt like the development, the field development from a drilling perspective was happening, we felt like that that 200,000 barrels a day is is about the right level. So, you know, outside of the two compressor stations that we're building this year, we're, you know, in the process of of progressing the the Capa gas plant.

[John Gatling, President & COO at Hess Midstream]

You know, as far as material long term infrastructure, activity, we're we're kind of at that at that level where the infrastructure is stable. And so from from our perspective, you know, we're kind of looking at this as how does the the drilling activity and the infrastructure system really complement each other so that you get very, very high utilization of that equipment and really optimize the system itself. So that's really kind of where we are and how we've continued to look at it. As we continue to look longer term, we'll look at our development plan again, which again, it's a very integrated activity between the upstream and the midstream. That'll happen in the fall, and then we'll be updating our longer term guidance in January.

[Jonathan Stein, CEO at Hess Midstream]

Yeah, this is Jonathan. One thing to highlight, John really picked it up on the end and I think it's important to highlight at this stage, which is one of the historic strengths of Hess Midstream has been the partnership that we've had between the upstream and the midstream between Hess Midstream and the upstream and Hess to be able to develop the Bakken in the most optimal way. And now as we go forward with Chevron, there's no change to that partnership. There's no change to the focus on both of us working together to optimize the Bakken and develop it, as John described. And as he said, the normal process will continue where we get an updated development plan.

[Jonathan Stein, CEO at Hess Midstream]

We'll figure out what's the right infrastructure required to meet that development plan going forward. And then we'll update our guidance based on that going forward. So really continuing in that strong partnership that has really been a hallmark of our relationship historically.

[John Mackay, VP - Equity Research at Goldman Sachs]

That's helpful. And that's all clear. Maybe just one related one. Since you've seen kind of increased efficiencies on the upstream side there, just what's been the latest commentary around related inventory life?

[John Gatling, President & COO at Hess Midstream]

Yeah, I mean, think, you know, we're still everybody gets still hung up on rig count and well counts and all of that. And, you know, really as we move into an extended lateral program, it really is the lateral footage drilled. And so, our perspective, the overall lateral footage that's been drilled as far as what's available to develop, really remains unchanged. And in fact, we're actually seeing a little bit of growth in that space, just from the standpoint of as those extended laterals become a bigger part of the portfolio, that creates opportunities for improved economics on those wells where they may be in more challenged areas. But if you're drilling a three, four mile lateral, the economics get much better and that unlocks some of the rock that may have been challenged before.

[John Gatling, President & COO at Hess Midstream]

So, I think we continue to be extremely optimistic in that space and that's something that continues to be a tailwind for us as we look forward for the basin development.

[John Mackay, VP - Equity Research at Goldman Sachs]

All right, that's clear. I appreciate the time. Thank you.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Jonathan Stein, CEO
• John Gatling, President & COO

Analysts

• Jennifer Gordon, Director of Investor Relations at Hess Midstream
• Michael Chadwick, CFO at Hess Midstream
• Analyst
• Saumya Jain, Equity Research Associate at UBS Group
• Doug Irwin, Vice President at Citi
• Praneeth Satish, Analyst at Wells Fargo
• John Mackay, VP - Equity Research at Goldman Sachs