Hess Midstream combines Chevron-backed, contract-protected cash flows with a 7.7% yield and potential 34.5% five-year appreciation, despite mature-basin concentration.
Overview
Hess Midstream LP is a North Dakota-focused midstream partnership that gathers, processes, stores, and terminals hydrocarbons for Chevron and selected third-party producers. Its **100% fee-based contracts, rolling three-year MVCs, and terms extending through 2033** make cash flows materially less sensitive to commodity prices and short-term throughput volatility. Chevron contributes approximately 95% of revenue, creating concentration risk but also providing a captive, economically aligned anchor customer. HESM operates more than 2,335 pipeline miles and the 400 MMcf/d Tioga Gas Plant, with additional LM4 processing exposure. Q2 2026 revenue was $399.0 million, down 3.7% year over year, but EPS of $0.75 beat $0.65 consensus by 15.38%; the Gross Adjusted EBITDA margin expanded to 85% and Adjusted Free Cash Flow rose 19% to $231.6 million. FY 2026 guidance calls for $1,225 million-$1,275 million of EBITDA and $910 million-$960 million of Adjusted Free Cash Flow. At $39.91, valuation is 9.6x trailing and 9.5x forward EV/EBITDA, while the quarterly distribution of $0.7888 implies approximately 7.7% annualized yield. Near-term catalysts are refinancing the July 2027 facilities and any Chevron acceleration of Bakken drilling.