Hess Midstream LP Reports Estimated Results for the First Quarter Of 2021

Rhea-AI Impact

(Low)

Rhea-AI Sentiment

(Neutral)

Tags

04/28/2021 - 08:00 AM

Hess Midstream LP (NYSE: HESM) (“Hess Midstream”) today reported first quarter 2021 net income of $159.6 million compared with net income of $129.0 million for the first quarter of 2020. After deduction for noncontrolling interests, net income attributable to Hess Midstream was $8.6 million, or $0.45 per Class A share. Hess Midstream generated Adjusted EBITDA of $226.7 million. Distributable Cash Flow (“DCF”) for the first quarter of 2021 was $204.6 million and Adjusted Free Cash Flow was $182.2 million.

“We continue to advance projects that will significantly expand our gas capture capability further positioning us for long-term organic growth,” said John Gatling, President and Chief Operating Officer of Hess Midstream. “With 95% revenue protection from minimum volume commitments through 2022, we are uniquely positioned to deliver continued growth in Adjusted EBITDA, adjusted free cash flow and distributions with low leverage and downside contract protection.”

Hess Midstream’s results contained in this release are consolidated to include the noncontrolling interests in Hess Midstream Operations LP owned by affiliates of Hess Corporation (“Hess”) and Global Infrastructure Partners (“GIP”). We refer to certain results as “attributable to Hess Midstream LP,” which exclude the noncontrolling interests in Hess Midstream Operations LP owned by Hess and GIP.

______________________________
¹ Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow are non-GAAP measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the following pages of this release.

Financial Results

Revenues and other income in the first quarter of 2021 were $288.8 million compared with $290.8 million in the prior-year quarter. First quarter 2021 revenues included $18.8 million of pass-through rail transportation, electricity, produced water trucking and disposal costs and $13.4 million of shortfall fee payments related to minimum volume commitments compared with $49.3 million and $1.0 million, respectively, in the prior-year quarter. Excluding pass-through revenues, first quarter 2021 revenues and other income were up $28.5 million compared to the prior-year quarter primarily due to higher tariff rates. Total costs and expenses in the first quarter of 2021 were $106.3 million down from $138.0 million in the prior-year quarter. The decrease was primarily attributable to lower pass-through transportation costs.

Net income for the first quarter of 2021 was $159.6 million, or $0.45 per Class A share, after deduction for noncontrolling interests. Substantially all of income tax expense is attributed to earnings of Class A shares reflective of our organizational structure. Net cash provided by operating activities for the first quarter of 2021 was $165.4 million.

Adjusted EBITDA for the first quarter of 2021 was $226.7 million. Relative to distributions, DCF for the first quarter of 2021 of $204.6 million resulted in an approximately 1.6x distribution coverage ratio. Adjusted Free Cash Flow for the first quarter of 2021 was $182.2 million.

Operational Highlights

Throughput volumes decreased 23% for crude oil terminaling and 22% for crude oil gathering in the first quarter of 2021 compared with the first quarter of 2020 due to reduced drilling activity and the impact of severe winter weather. Throughput volumes decreased 6% for gas gathering and gas processing in the first quarter of 2021 compared with the first quarter of 2020 driven by lower third-party volumes, partially offset by higher gas capture of Hess volumes. The impact of the reduction in physical volumes in the first quarter of 2021 compared to the first quarter of 2020 was offset by higher tariff rates and shortfall fee payments related to minimum volume commitments. Water gathering volumes increased 30% compared with the year-ago quarter reflecting continued steady organic growth of our water handling business. Third parties comprised approximately 15% of crude oil gathering and 10% of gas gathering volumes for the first quarter of 2021. Hess added a second operated rig in the Bakken in February 2021.

Capital Expenditures