Hess Midstream LP

Good day, ladies and gentlemen, and welcome to the fourth quarter 2022 HES Midstream Conference Call. My name is Tawanda, and I will be your operator for today. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded for replay purposes. I would now like to turn the conference over to Jennifer Gordon, Vice President of Investor Relations. You may proceed.

Thank you. Good afternoon, everyone, and thank you for participating in our fourth quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.earningsconference.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 factors 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. With me today are John Gatling, President and Chief Operating Officer, and Jonathan Stein, Chief Financial Officer. I'll now turn the call over to John Gatling.

Thanks, Jennifer. Good afternoon, everyone, and welcome to HESS Midstream's fourth quarter 2022 conference call. Today, I'll review our 2022 operating performance and highlights, provide details regarding our 2023 plans and outlook for through 2025, and discuss HESS Corporation's latest results and outlook for the Bakken. Jonathan will then review our financial results. Despite severe winter weather conditions, 2022 was a year of continued strong performance and execution for HESS Midstream. We delivered volume growth and expanded our compression capacity by more than 25%, further enhancing our gas capture capability. As discussed in our guidance release, we've established our 2025 minimum volume commitments, and we're confident in the implied volume growth, which is underpinned by the following. First, PEST plans to continue to operate a four-rig drilling program and expects to bring approximately 110 wells online per year in 2023 and 2024. This will grow HESS's production to an average of approximately 200,000 barrels of oil equipment per day in 2025. Second, HESS has an approximate 15-year inventory of profitable drilling locations with a four-rig program at $60 WTI. And finally, HESS Midstream's focused capital program prioritizes the expansion of our gas gathering system to support gas throughput volumes increasing by more than 30% in 2025 relative to 2022. driven by HESA's planned development activity and goal of achieving zero routine flaring by the end of 2025. We're also confident in the delivery of our financial guidance and the potential to provide incremental shareholder returns above our targeted annual distribution growth as our revenues are 80 to 90% covered by MVCs through 2025 and the significant growth in gas volumes which is supportive to HESS Midstream as approximately 75% of our revenues are generated from our gas business. Now turning to HESS Upstream highlights. HESS announced Bakken net production averaged 158,000 barrels of oil per day in the fourth quarter, reflecting severe winter weather impacts in December, which limited bringing new wells online to 15 for the quarter. For full year 2022, Bakken net production averaged 154,000 barrels of oil equipment per day. Now turning to HESS's production guidance. For full year 2023, HESS forecasts Bakken net production will average between 165 and 170,000 barrels of oil equipment per day, a 9% increase compared to 2022. First quarter net production is forecast to average between 155 and 160,000 barrels of oil equipment per day, including weather contingencies and carryover effects from December. HESS forecasts Bakken net production to steadily grow over the course of 2023 and 2024 and average approximately 200,000 barrels of oil equipment per day in 2025. HESS expects to hold this level of production for nearly a decade. Now focusing on HESS Midstream's fourth quarter 2022 results. Gas processing volumes average 312 million cubic foot per day reflecting the impact of severe winter weather in December. Fourth quarter crude terminaling and water gathering volumes averaged 101,000 barrels of oil per day and 77,000 barrels of water per day, respectively, resulting in full year adjusted EBITDA of $983 million, representing an 8% increase of 8% compared to 2021. Turning to HESS Midstream's guidance. For full year 2023, we expect gas processing volumes to average between 350 and 360 million cubic foot per day, representing growth of approximately 11% compared to 2022, primarily driven by HESA's development activity and our focused gas capture efforts. For full year 2023, we anticipate crude terminating volumes to average between 105 and 115,000 barrels of oil per day, and water gathering volumes to average between 85 and 95,000 barrels of water per day. We project adjusted EBITDA for 2023 in the range of $990 million to $1 billion 30 million, an increase of approximately 3% at the midpoint compared to full year 2022. The adjusted EBITDA increase driven primarily by the transition from high MVC coverage to physical volume growth, which is underpinned by full impact of hess's four rig development program turning to hess midstream's 2023 capital program for full year 2023 capital expenditures are expected to total 225 million dollars comprised of 210 million of expansion activity and 15 million dollars of maintenance activity approximately 100 million dollars of the 2023 expansion capital budget is allocated to gas compression with activities focused on the completion of two greenfield compressor stations and associated pipeline infrastructure, which are expected to provide, in aggregate, an additional 100 million cubic foot per day of gas compression capacity when brought online, further enhancing our gas capture capability. Approximately $110 million is allocated to gathering system well connects to service HESS and third-party customers and optimization of our existing gathering system. In summary, we're continuing to execute our strategy of making focused, low-risk investments to meet basin demands, delivering reliable operating performance and strong financial results. We're well positioned for substantial growth, as implied by our guided 2025 MVCs, which are underpinned by HESA's planned development activity and our continued focus on gas capture, which is expected to result in sustainable excess cash flow generation and the potential to return additional capital to our shareholders. I'll now turn the call over to Jonathan to review our financial results and guidance.