Hess Midstream LP

Good day, ladies and gentlemen, and welcome to the second quarter 2022 HESS Midstream Conference Call. My name is Victor, and I'll be your operator for today. At this time, our participants are in listen-only mode. Later, we will conduct a question and answer session. 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, Victor. Good afternoon, everyone, and thank you for participating in our second 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 filings with 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 and our transcript of today's prepared remarks. With me today are John Gatling, President and Chief Operating Officer, and Jonathan Stein, Chief Financial Officer. In case there are audio issues, we will be posting transcripts of each speaker's prepared remarks on www.hessmidstream.com following their presentation. I'll now turn the call over to John Gatling.

Thanks, Jennifer. Good afternoon, everyone, and welcome to HESS Midstream's second quarter 2022 conference call. Today, I will review the progress we're making on executing our strategy, discuss our operating performance and capital program, and review HESS Corporation's results and outlook for the Bakken. Jonathan will then review our financial results and guidance. Beginning with HESS's upstream results, today HESS reported second quarter Bakken net production averaged 140,000 barrels of oil equipment per day, reflecting the impact of severe weather in April and May. HESS's production is recovering, well results continue to meet or exceed expectations, and HESS anticipates production to build in the second half of the year as they bring approximately 50 wells online compared to 32 wells in the first half of 2022. Bakken net production for the third quarter is expected to increase to between 155 and 160,000 barrels of olecum per day and further grow to between 160 and 165,000 barrels of oil equipment per day in the fourth quarter. For full year 2022, HESS forecasts Bakken net production to average between 150 and 155,000 barrels of oil equipment per day. Furthermore, HESS announced a fourth drilling rig commenced operations in the Bakken during July, supporting HESS's planned production ramp to approximately 200,000 barrels of oil equipment per day by 2024. With HESS Midstream's focused gathering infrastructure expansion, we're ready to meet HESS's accelerated development pace, which is expected to drive volume growth through our system, allowing us to reaffirm our expected throughput growth above MVCs in 2023 and 2024. Turning to HESS Midstream's results, our second quarter throughput volumes averaged 292 million cubic foot per day for gas processing, 93,000 barrels of oil per day for crude terminaling, and 65,000 barrels of water per day for water gathering. As physical volumes are already expected to be at or below MVC levels, there was no material impact to our second quarter financial results relative to our guidance. The weather-related deferral of planned maintenance activity to the second half of the year drove lower than anticipated operating costs for the second quarter, resulting in adjusted EBITDA of $243 million compared to our guidance of approximately $235 million. Turning to HESS midstream guidance, which was included in our earnings released and is available on our website. We're reaffirming our previously announced full year 2022 financial guidance and updating our throughput guidance to reflect the impact of severe weather experienced in the second quarter. For full year 2022, we now expect gas processing volumes to average between 315 and 330 million cubic foot per day. and crude terminaling volumes to average between 103 and 108,000 barrels of oil per day. Reflecting strong growth and operating performance, we continue to expect water gathering volumes to average between 70 and 75,000 barrels of water per day for full year 2022. As a reminder, with physical volumes on our systems expected to be at or below MVCs in 2022, our 95% revenue protection gives us a high degree of confidence in our financial guidance. turning to Hess Midstream's 2022 capital program. We continue to make excellent progress on our 2022 capital program with activities primarily focused on flare reduction through the continued expansion of our gas capture infrastructure. We recently completed construction and commenced commissioning of the second of two new compressor station startups planned this year. We expect to bring the stations online in the third quarter, completing the project below budget and several months ahead of schedule. In aggregate, our two new compressor stations provide an additional 85 million cubic foot per day of installed capacity in 2022 and can be efficiently expanded up to 130 million cubic foot per day in the future. As previously announced, we expect to initiate construction on a third compressor station in the fourth quarter, which would provide an additional 65 million cubic foot per day of installed capacity in 2023, further growing our capacity and supporting HESA's accelerated development. In addition, our close integration with HESS and lean focused standard design philosophy has enabled us to largely mitigate near-term inflation and maintain full year capital guidance. 2022 capital expenditures are expected to total approximately $235 million, comprised of $225 million of expansion and $10 million of maintenance activity. We expect to invest approximately $120 million in compression expansion, and reflecting increasing drilling activity by HESS approximately $105 million in gathering system well connects. In closing, we continue to execute our strategy, making efficient and low-risk infrastructure investments to meet basin growth demands, delivering safe and reliable operating performance, and strong financial results, enabling us to grow our business and return capital to our shareholders. I'll now turn the call over to Jonathan to review our financial results.