Hess Midstream LP

Good day, ladies and gentlemen, and welcome to the first quarter 2021 HESS Midstream conference call. My name is Andrew, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session, and if at any time you require operator assistance, please press star followed by zero, and we'll be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Jennifer Gordon, Vice President of Investor Relations. Please proceed.

Thank you, Andrew. Good afternoon, everyone, and thank you for participating in our first quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the risk factor section of HES Midstream's filing of the SEC. Also on today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release. With me today are John Gatling, President and Chief Operating Officer, and Jonathan Stein, Chief Financial Officer. In compliance with social distancing protocols as a result of COVID-19, we are conducting the call remotely, so please bear with us. In case there are audio issues, we will be posting transcripts of each speaker's prepared remarks on www.hessmidstream.com following their presentations. I'll now turn the call over to John Gatling.

Thanks, Jennifer. Good afternoon, everyone, and welcome to HESS Midstream's first quarter 2021 conference call. Today, I'll review our operating performance and highlights as we continue to deliver our strategy and discuss HESS Corporation's latest results and outlook for the Bakken. Jonathan will then review our financial results. We're pleased with the progress we're making on executing our strategy, and we're excited about the stable and visible earnings growth ahead of us. Over the past 24 months, Hess Midstream has undertaken a strategic effort to increase our gas capture capability by expanding our gas compression and processing capacity. This year, we expect to progress construction of two new greenfield compressor stations, which went online in 2022, will meaningfully expand our gas compression capacity by another 20 percent. In addition, the final tie-ins of the Tioga gas plant expansion will increase our processing capacity and solidly position us to capture incremental volumes as we support HESS and third-party customers meet North Dakota's tightening flare reduction targets. Our contract complements our strategic asset base and provides resilience and stability to our financial performance. as demonstrated by the strong financial results we delivered in the first quarter, despite the challenges of the last year. And further supports are 2021 EBITDA guidance, which is underpinned by 95% revenue protection. Now turning to HES Midstream's first quarter 2021 performance. Throughputs and operating results in the first quarter were in line with expectations, though adverse weather did impact operations in February. some planned maintenance activities pushing into the second quarter. First quarter gas processing volumes averaged 302 million cubic foot per day, crude terminaling volumes were 125,000 barrels of oil per day, and water gathering volumes averaged 70,000 barrels of water per day. Third parties contributed approximately 10% of our gas and 15% of our oil volumes in the first quarter, consistent with the fourth quarter and in line with our guidance. Now turning to HESS upstream highlights. Earlier today, HESS reported first quarter production results in the Bakken production average 158,000 barrels of oil equivalent per day. As previously announced, HESS added a second operated drilling rig to the Bakken in February. For four year 2021, HESS forecast Bakken net production to average between 155 and 160,000 barrels of oil equivalent per day. reduced from previous guidance of 170,000 barrels of oil equipment per day, primarily driven by lower NGL volumes received by HESS under Percentage of Proceeds Contracts, or POP, and the previously announced sale of non-strategic Bakken acreage. POP volumes relate to the recovery of non-operated processing fees directly received by HESS and does not impact HESS Midstream's throughputs. Furthermore, the acreage Hess agreed to sell is not being or planned to be gathered by Hess Midstream. Hess expects Bakken net production to build in the second half of 2021 and exit the year between 170 and 175,000 barrels of oil equipment per day. Turning to Hess Midstream guidance, we're reaffirming our full year financial and operational guidance, which was included in this morning's earnings release and is available on our website. For full year 2021, we expect gas processing volumes to average between 270 and 280 million cubic foot per day. Our processing guidance incorporates the previously announced 45-day maintenance turnaround at the Tioga gas plant, which is planned to commence in the third quarter, reducing our annual gas gathering and processing volumes by approximately 30 million cubic foot per day. Turning to our crude oil assets, For full year 2021, we expect crude terminaling volumes to average between 120 and 130,000 barrels of oil per day. Our full year guidance continues to anticipate that third parties will contribute approximately 10% of our gas volumes and 15% of our crude oil volumes, consistent with levels we achieved in the first quarter of 2021. As physical volumes on most of our systems are at or below MVC levels, our revenue forecast is approximately 95% protected and expected to deliver adjusted EBITDA guidance in the range of $860 to $890 million, an increase of approximately 17% at the midpoint compared to full year 2020. We expect second quarter gas, oil, and water volumes to each be modestly lower compared to first quarter as increasing wells online and recovery from winter weather is offset by production declines and planned maintenance activities. Turning to HES Midstream's 2021 capital program. We're making excellent progress on executing our 2021 capital program with activities primarily focused on strengthening our gas capture and water gathering and disposal capacity. For full year 2021, capital expenditures are expected to total $160 million, approximately 35% lower than full year 2020, reflecting lower ongoing capital needs following the completion of expansion construction activities at the Tioga gas plant. We continue to forecast expansion capital of approximately $140 million and maintenance capital of approximately $20 million. In summary, we continue to advance our strategy as we build out our infrastructure and prepare for future organic growth. With 95% revenue protection through 2022, we are uniquely positioned and expect to deliver sustainable and growing adjusted EBITDA, adjusted free cash flow, and distributions with low leverage and contract protection. I'll now turn the call over to Jonathan to review our financial results and guidance.