2019 Guidance Highlights Include:
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Net Income of $415—$440 million.
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Adjusted EBITDA1 of
$550—$575 million, of which $108—$113 million is attributable to Hess
Midstream Partners LP.
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DCF1 of Hess Midstream
Partners LP of $103—$108 million.
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Gas gathering volumes of 280—290 million standard cubic feet per
day (MMscf/d).
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Gas processing volumes of 265—275 million standard cubic feet
per day (MMscf/d).
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Crude oil gathering volumes of 105—115 thousand barrels of oil
per day (Mbo/d).
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Crude oil terminaling volumes of 120—130 thousand barrels of oil
per day (Mbo/d).
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Capital guidance, including equity investments, of
$275—$300 million gross, $55—$60 million net to Hess Midstream
Partners LP.
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Annual Minimum Volume Commitments (MVCs) under long-term
contracts with Hess Corporation increasing for substantially all
throughputs for 2019 and 2020, new MVCs provided for 2021.
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Hess Midstream Partners LP is targeting long-term 15% annual
distribution growth per unit with at least a 1.1x distribution
coverage ratio.
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Planned expansion of the Tioga Gas Plant of at least 50 MMscf/d
in 2020-2021.
Hess Midstream Partners LP (NYSE: HESM) (“Hess Midstream”) today
provided 2019 guidance and announced its 2019 Capital budget.
John Hess, Chairman and CEO of Hess Midstream, said: “Hess Corporation
has an industry leading acreage position in the Bakken with more than a
15-year inventory of high return drilling locations. The Bakken’s
production growth outlook of 20 percent per year through 2021 supports
Hess Midstream’s continued infrastructure buildout, throughput growth
and annual distribution growth target of 15 percent.”
Full Year 2019 Guidance
Full year 2019 volumes are anticipated to grow significantly versus
2018, driven by planned production growth from Hess Corporation and the
start-up of the Little Missouri 4 (LM4) gas processing plant, which is
expected to occur during the second quarter of 2019.
In 2019, gas gathering volumes are anticipated to average 280 to
290 MMscf/d and gas processing volumes are expected to average 265 to
275 MMscf/d. Growth in gas volumes is anticipated to be weighted to the
second half of 2019, aligned with the ramp up of processing volumes at
the LM4 plant.
Crude oil gathering volumes are anticipated to average 105 to 115 Mbo/d
in 2019, and crude oil terminaling volumes are expected to average 120
to 130 Mbo/d on continued growth in Hess Corporation’s and third-party
production.
Hess Midstream financial guidance incorporates the outcomes of the end
year tariff rate recalculation and nomination process conducted with
Hess Corporation under Hess Midstream’s commercial agreements with Hess
Corporation.
Hess Midstream anticipates increased revenues in 2019 compared to full
year 2018 guidance, driven by a forecasted double-digit percentage
increase in throughputs, partly offset by additional fees associated
with the LM4 gas processing plant and higher electricity pass-through
expenses for which we recognize revenues in an amount equal to the costs.
Hess Midstream anticipates 2019 net income of between $415 million and
$440 million and Adjusted EBITDA of between $550 million and
$575 million. Adjusted EBITDA attributable to Hess Midstream is
estimated to be $108 million to $113 million. Hess Midstream estimates
Distributable Cash Flow for the full year 2019 to range between $103
million and $108 million.
Hess Midstream anticipates a distribution coverage ratio closer to its
1.1x long-term target in the first half of 2019, followed by higher
coverage in the second half of the year, in line with the expected
volume ramp-up of the LM4 gas processing plant.
2019 Capital Guidance
Hess Midstream’s 2019 capital expenditures, including equity investments
associated with the joint venture with Targa Resources Corp., is
expected to be between $275 million and $300 million gross, $55 million
and $60 million net to Hess Midstream. The 2019 capital program is
primarily focused on continued expansion of gas compression capacity in
the Bakken, completion of construction and commissioning of the LM4 gas
processing plant and associated gathering pipelines, and preliminary
engineering work on a planned expansion of the Tioga Gas Plant. The
balance of 2019 expenditures are expected to be allocated to system
build outs to service Hess Corporation and third-party customers,
gathering system well connects, and maintenance activities.
Approximately $265 million to $285 million gross, $53 million to $57
million net to Hess Midstream, of the total 2019 capital budget is
allocated to expansion expenditures, including equity investments
associated with the joint venture with Targa Resources Corp., with an
estimated $10 million to $15 million gross, $2 million to $3 million net
to Hess Midstream, allocated to maintenance expenditures.
Gas Compression Expansion
Approximately $140 million to $150 million gross, $28 million to
$30 million net to Hess Midstream, of the 2019 capital program is
expected to be allocated to continued expansion of gas compression
capacity. This expansion supports Hess Corporation’s recently announced
and increased long-term production outlook and enables the delivery of
increasing volumes to our gas processing facilities. Activities in 2019
include construction and commissioning of new compression facilities,
expansion of existing facilities and associated infrastructure, and
engineering work on planned future compression expansions.
Gas Processing Expansion
Approximately $40 million to $50 million gross, $8 million to
$10 million net to Hess Midstream, of the 2019 capital program is
expected to be deployed in respect of expanding our gas processing
capacity. Activities are focused upon the completion of the LM4 gas
processing plant, a 200 MMscf/d plant to be located south of the
Missouri River near Watford City, North Dakota, and engineering work for
a planned expansion of the Tioga Gas Plant. Construction activities at
both the LM4 gas processing plant and related pipeline infrastructure
are well advanced and start-up is expected in the second quarter of 2019.
In 2019, Hess Midstream also expects to progress engineering for a
planned expansion at the Tioga Gas Plant to meet increasing demand for
gas processing from both Hess and third-party customers. Subject to
satisfactory completion of project evaluations, Hess Midstream currently
anticipates increasing total gas processing capacity to at least 400
MMscf/d, through a planned Tioga Gas Plant expansion of at least 50
MMscf/d that is expected to be in service in the 2020-2021 timeframe.
System Build Outs for Hess Corporation and Third Parties, Well
Connects
Approximately $85 million gross, $17 million net to Hess Midstream, of
the 2019 capital budget is estimated to be spent on undertaking key
system build outs to meet Hess Corporation and third-party oil and gas
volumes, including connecting wells to our expanding gathering system.
Maintenance Activities
Approximately $10 million to $15 million gross, $2 million to $3 million
net to Hess Midstream, of the 2019 capital budget is allocated to
maintenance expenditures. No major maintenance activities are planned
for 2019.
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Year Ending
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December 31, 2019
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(Unaudited)
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Financials (millions)
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Consolidated Adjusted EBITDA
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$
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550 - 575
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Adjusted EBITDA attributable to Hess Midstream Partners LP
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$
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108 - 113
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DCF of Hess Midstream Partners LP
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$
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103 - 108
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Expansion capital, net
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$
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53 - 57
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Maintenance capital, net
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$
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2 - 3
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Year Ending
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December 31, 2019
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(Unaudited)
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Throughput volumes (thousands)
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Gas gathering - Mcf of natural gas per day
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280 - 290
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Crude oil gathering - bopd
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105 - 115
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Gas processing - Mcf of natural gas per day
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265 - 275
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Crude oil terminaling - bopd
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120 - 130
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Minimum Volume Commitments
As part of the annual nomination process set forth in our long-term
commercial contracts, Hess Corporation’s minimum volume commitments
(MVCs) were reviewed and updated, based upon the nomination of Hess
Corporation and third-party throughputs contracted through Hess
Corporation. MVCs are set annually at 80% of Hess Corporation’s
nomination for the three years following each nomination. Once set, MVCs
for each year can only be increased and not reduced.
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Hess Corporation's Minimum Volume Commitment
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2019
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2020
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2021
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Throughput volumes (thousands)
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Gas gathering - Mcf of natural gas per day
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251
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303
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304
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Crude oil gathering - bopd
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113
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126
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126
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Gas processing - Mcf of natural gas per day
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229
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265
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290
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Crude oil terminaling - bopd
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127
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143
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153
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About Hess Midstream
Hess Midstream Partners LP is a fee-based, growth oriented traditional
master limited partnership that was formed to own, operate, develop and
acquire a diverse set of midstream assets to provide services to Hess
Corporation and third-party customers. Hess Midstream’s assets are
primarily located in the Bakken and Three Forks Shale plays in the
Williston Basin area of North Dakota. More information is available at www.hessmidstream.com.
Reconciliation of U.S. GAAP to Non-GAAP Measures
In addition to our financial information presented in accordance with
U.S. generally accepted accounting principles (GAAP), management
utilizes additional non-GAAP measures to facilitate comparisons of past
performance and future periods. Hess Midstream uses two non-GAAP
financial measures in this earnings release. “Adjusted EBITDA” presented
in this release is defined as reported net income (loss) plus net
interest expense, income tax expense and depreciation and amortization,
as further adjusted to eliminate the impact of certain items that we do
not consider indicative of our ongoing operating performance, such as
other income and other non-cash, non-recurring items, if applicable. We
define Adjusted EBITDA attributable to Hess Midstream Partners LP as
Adjusted EBITDA less Adjusted EBITDA attributable to Hess Infrastructure
Partners LP retained interests in our joint interest assets.
“Distributable Cash Flow” (“DCF”) is defined as Adjusted EBITDA
attributable to Hess Midstream Partners LP less cash paid for interest
and maintenance capital expenditures. Distributable cash flow does not
reflect changes in working capital balances. We believe that investors’
understanding of our performance is enhanced by disclosing these
measures as they may assist in assessing our operating performance as
compared to other publicly traded partnerships in the midstream energy
industry, without regard to historical cost basis or, in the case of
Adjusted EBITDA, financing methods, and assessing the ability of our
assets to generate sufficient cash flow to make distributions to our
unitholders. These measures are not, and should not be viewed as, a
substitute for U.S. GAAP net income or cash flow from operating
activities and should not be considered in isolation. A reconciliation
of net income attributable to Hess Midstream Partners LP (GAAP) to
Adjusted EBITDA and Distributable Cash Flow is provided below.
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Guidance
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Year Ending
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December 31, 2019
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(Unaudited)
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(in millions)
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Reconciliation of Adjusted EBITDA attributable to Hess
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Midstream Partners LP and Distributable Cash Flow
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attributable to Hess Midstream Partners LP to
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net income:
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Net income
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$
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415 - 440
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Plus:
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Depreciation expense
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132
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Interest expense, net
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3
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Adjusted EBITDA
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550 - 575
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Less: Adjusted EBITDA attributable to noncontrolling interest(a)
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442 - 462
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Adjusted EBITDA attributable to Hess Midstream Partners LP
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108 - 113
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Less:
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Cash interest paid, net and maintenance capital expenditures
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5
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Distributable cash flow attributable to Hess Midstream Partners LP
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$
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103 - 108
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(a)
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Reflects Hess Infrastructure Partners LP 80% noncontrolling
economic interest in the net income of Hess North Dakota Pipelines
Operations LP, Hess TGP Operations LP and Hess North Dakota Export
Logistics LP.
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Forward-looking Statements
This press release may include forward-looking statements within the
meaning of the federal securities laws. Generally, the words
“anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,”
“may,” “should,” “believe,” “intend,” “project,” “plan,” “predict,”
“will” and similar expressions identify forward-looking statements,
which generally are not historical in nature. Forward-looking statements
are subject to certain risks and uncertainties that could cause actual
results to differ materially from historical results and current
projections or expectations. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in Hess Midstream’s annual report on Form 10-K for
the year ended December 31, 2017, and in other reports we file with the
Securities and Exchange Commission. Hess Midstream undertakes no
obligation and does not intend to update these forward-looking
statements to reflect events or circumstances occurring after this press
release. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release.
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1 Adjusted EBITDA and DCF are non-GAAP measures.
Definitions and reconciliations of these non-GAAP measures to GAAP
reporting measures appear in the following pages of this release.
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