Hess Midstream LP (HESM) has issued a revised operational and financial outlook for 2025 through 2027, signaling a strategic adjustment to evolving Bakken upstream activity. The core of this revision stems from an anticipated reduction in Chevron’s drilling rig count in the Bakken, decreasing from four to three rigs starting in the fourth quarter of 2025. While this adjustment impacts crude oil throughput projections, leading to an expected plateau in 2026, Hess Midstream continues to project long-term growth in gas throughput volumes through at least 2027. For investors, this update requires a nuanced understanding of volume sensitivities, capital allocation adjustments, and the company’s unwavering commitment to shareholder returns amidst a dynamic energy market.
Bakken Throughput Dynamics: Adjusting to Upstream Shifts
Hess Midstream’s revised guidance directly reflects the sensitivity of midstream infrastructure to upstream drilling decisions. The decision by Chevron to reduce its Bakken rig count by one from Q4 2025 is the primary catalyst for the updated projections. This move is expected to cause crude oil throughput volumes to plateau in 2026, a shift from previous growth expectations. However, it’s crucial to note that gas throughput volumes are still forecast to grow through 2027, highlighting the continued development of natural gas resources in the Bakken. For 2025, the company has specifically adjusted its full-year gas gathering volumes to average between 455 and 465 million cubic feet per day (MMcfd), down from an earlier range of 475-485 MMcfd. Similarly, gas processing volumes are now expected to average 440 to 450 MMcfd, compared to the prior 455-465 MMcfd forecast. These immediate adjustments for 2025 are attributed to adverse weather and maintenance in the third quarter, alongside lower expected third-party volumes in the fourth quarter. Despite these changes, Hess Midstream maintains that throughput volumes will generally remain above established minimum volume commitments, providing a critical floor for revenue stability.
Market Volatility and Investor Focus on Future Prices
The backdrop to Hess Midstream’s revised outlook is a highly volatile crude oil market, a factor that undoubtedly influences upstream investment decisions like Chevron’s rig count reduction. As of today, Brent crude trades at $90.38, marking a significant 9.07% decline, while WTI crude stands at $82.59, down 9.41% within the day’s trading range. This sharp daily drop extends a broader trend, with Brent having fallen from $112.78 on March 30 to $91.87 just yesterday, representing an 18.5% decrease in less than three weeks. Such market fluctuations naturally prompt investors to ask critical questions, with our proprietary data showing a strong interest in “what do you predict the price of oil per barrel will be by end of 2026?” and “What are OPEC+ current production quotas?” These inquiries underscore the market’s anxiety regarding future pricing and supply-demand balances. Hess Midstream’s conservative adjustment to its guidance can be viewed as a prudent response to this macro uncertainty, reflecting a realistic assessment of the potential for sustained upstream capital discipline in a lower-price environment. While the company’s diversified gas and oil streams offer some resilience, the overall health of the crude market remains a dominant concern for investors evaluating midstream opportunities.
Strategic Capital Allocation and Robust Shareholder Returns
Despite the adjustments to throughput volumes, Hess Midstream’s financial strategy remains sharply focused on capital efficiency and shareholder returns. The company now anticipates full-year 2025 net income and Adjusted EBITDA to fall within the lower half of its previously announced guidance range, with third-quarter 2025 figures expected at the lower end. However, a significant positive development for investors is the expectation of “significantly lower capital spending in 2026 and 2027.” This reduction is a direct result of the suspension of early engineering activities on the Capa gas plant, with the project now removed from the forward plan. This move demonstrates proactive capital management, redirecting resources away from potentially less immediately accretive projects in a revised volume environment. Consequently, Hess Midstream projects continued Adjusted EBITDA growth and sustained adjusted free cash flow growth through 2027. This financial strength is intended to support the company’s robust return of capital framework, which includes a targeted annual distribution per Class A share growth of at least 5% through 2027, along with the flexibility for incremental returns, such as potential share repurchases. This commitment to consistent and growing distributions, even with an adjusted activity outlook, is a key pillar of the company’s investment thesis.
Upcoming Catalysts and Proactive Risk Management
Looking forward, the broader energy market calendar holds several critical events that will continue to shape the investment landscape for midstream operators like Hess Midstream. The upcoming OPEC+ Joint Ministerial Monitoring Committee (JMMC) and Full Ministerial Meetings on April 18th and 19th, respectively, are paramount. Decisions made by OPEC+ regarding production quotas are central to stabilizing or further influencing crude oil prices, which directly impacts the investment appetite of upstream producers in regions like the Bakken. Investors closely monitoring “OPEC+ current production quotas” understand the profound implications these meetings have on future drilling activity. Furthermore, weekly indicators such as the API and EIA Crude Inventory reports, scheduled for April 21st, 22nd, 28th, and 29th, will provide ongoing insights into demand and supply dynamics. Most directly relevant to Hess Midstream’s operational context is the Baker Hughes Rig Count, set for release on April 24th and May 1st. While Chevron’s specific reduction is known, the broader trend in Bakken and national rig counts will offer a pulse on overall upstream health and future potential volume developments. Hess Midstream’s decision to proactively reduce capital expenditures by suspending the Capa gas plant project is a strong example of risk mitigation, aligning its investment strategy with revised throughput expectations and protecting its financial flexibility in a market susceptible to rapid shifts from both macro and micro factors.
