Hess Midstream Revenue Declines as Throughput Weakens
Adjusted free cash flow rose 19.5% to $231.6 million as capital spending fell.
Hess Midstream LP (HESM), the Bakken midstream operator, reported a 3.7% decline in second-quarter revenue and other income as lower throughput outweighed higher tariff rates and third-party services. The decline reversed the first quarter’s 2.1% growth, though revenue increased 2.3% sequentially.
The volume deterioration broadened during the quarter. Oil-terminaling volumes fell 15% from a year earlier and water-gathering volumes declined 12%, accelerating from first-quarter drops of 5% and 9%, respectively. Gas-processing throughput fell 4% because of planned maintenance at the Tioga Gas Plant, after growing 1% in the prior quarter.
Revenue and other income fell to $399.0 million from $414.2 million a year earlier. Basic earnings increased to $0.75 a Class A share from $0.74, while consolidated net income declined 3.3% to $173.7 million. Net income attributable to Hess Midstream rose to $96.4 million from $90.3 million.
Third-party services provided a partial offset to weaker affiliate activity. Third-party services revenue more than doubled to $17.9 million from $8.2 million, while affiliate services revenue fell to $379.8 million from $405.3 million. Operating costs and expenses declined to $145.8 million as lower employee and maintenance costs outweighed higher depreciation.
Adjusted EBITDA rose 4.6% sequentially to $313.7 million, leaving it 0.7% below the year-earlier period. Gross adjusted EBITDA margin expanded to 85% from 82%, while GAAP gross margin held at 63%.
Capital expenditures dropped 56% to $30.6 million following completion of a gas-compression expansion, supporting the increase in adjusted free cash flow. Spending had already shifted lower after the compression buildout was completed in late 2025.
Hess Midstream reaffirmed its 2026 guidance for net income of $650 million to $700 million, adjusted EBITDA of $1.225 billion to $1.275 billion and adjusted free cash flow of $910 million to $960 million. Its $105 million capital-spending forecast and throughput ranges are also unchanged despite the second-quarter volume declines.
The company raised its quarterly distribution to $0.7888 a Class A share from $0.7792 in the first quarter. The $0.0096 increase was smaller than the preceding quarter’s increase, extending cash returns while throughput remained under pressure.