Hess Midstream Reiterates 2026 Outlook After Announcing DJ Basin Deal

The Tip Desk · October 30, 2026 · 3 min read

Third-quarter 2026 revenues and other income were $410.1 million; adjusted free cash flow reached $247.9 million as capital spending fell 73% and the company raised its Class A distribution to $0.7985 a share.

Hess Midstream LP (HESM) reported third-quarter 2026 revenues and other income of $410.1 million and net income of $179.1 million, compared with net income of $175.5 million a year earlier.

After noncontrolling interests, net income attributable to the fee-based midstream company was $99.4 million, or $0.77 basic earnings per Class A share, versus $0.75 a year earlier. Adjusted EBITDA was $319.9 million. Net cash provided by operating activities was $267.9 million.

Revenues and other income were $410.1 million, down $10.8 million from the year-ago quarter. The company said the decline was primarily due to lower throughput volumes, partially offset by higher tariff rates. Third-quarter revenues included $29.5 million of pass-through electricity, produced water trucking and disposal costs and certain other fees.

Throughput volumes decreased 10% for oil terminaling, 8% for gas processing and 4% for water gathering versus the third quarter of 2025, primarily due to lower production. Direct third-party volumes were relatively flat. Gas gathering ran at 438 MMcf per day, crude oil gathering at 107 thousand barrels a day, gas processing at 427 MMcf per day, crude terminals at 117 thousand barrels a day and water gathering at 131 thousand barrels a day.

Total operating costs and expenses were $147.7 million, down from $162.0 million a year earlier, primarily due to lower charges under omnibus and employee secondment agreements and lower maintenance expenses. Interest expense, net of interest income, was $53.6 million, down from $57.1 million, primarily due to reduced borrowings under the revolving credit facility. Gross Adjusted EBITDA margin was 84%.

Capital expenditures totaled $21.5 million, a 73% decrease from $79.8 million in the prior-year quarter, mainly from completion of the company’s gas compression expansion in January 2026. That drop lifted Adjusted Free Cash Flow to $247.9 million from $186.8 million a year earlier. At September 30, 2026, the drawn balance on the revolving credit facility was $180.0 million.

Gathering generated $127.6 million of net income, processing and storage $111.5 million and terminaling and export $27.9 million. Interest and other recorded an $87.9 million loss.

On October 26, 2026, the board declared a quarterly cash distribution of $0.7985 per Class A share for the third quarter, an increase of $0.0097 versus the second quarter, in line with targeted annual distribution growth of at least 5% on an annualized basis. The payment is expected on November 13, 2026.

Chief Executive Officer Jonathan Stein said the quarter reflected a continued focus on managing costs while executing growth, and that the company has a sustained track record for generating free cash flow after distributions.

The company reiterated updated full-year 2026 guidance from its October 6, 2026 release: net income of $650 million to $675 million, Adjusted EBITDA of $1,225 million to $1,250 million, capital expenditures of $105 million and Adjusted free cash flow of $910 million to $935 million. Throughput guidance remains 435 to 445 MMcf per day for gas gathering, 110 to 120 thousand barrels a day for crude oil gathering, 425 to 435 MMcf per day for gas processing, 120 to 130 thousand barrels a day for crude terminals and 120 to 130 thousand barrels a day for water gathering.

Hess Midstream expects to continue targeting 5% annualized distribution growth in the fourth quarter of 2026 and said it expects to maintain quarterly distributions in 2027 consistent with the expected fourth-quarter 2026 amount, fully funded by Adjusted Free Cash Flow.

Stein said the company expects the transaction announced on October 6, 2026, to close by year-end and to transform Hess Midstream into a multi-basin, independent midstream company. The addition of DJ Basin assets is expected to approximately triple crude gathering throughput, significantly grow gas gathering throughput and add ownership in a long-haul crude oil pipeline.