Hess Midstream LP

Good day, ladies and gentlemen, and welcome to the fourth quarter 2023 HESS Midstream Conference Call. My name is Jonathan, and I will be your operator for today. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your 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. Please proceed.

Thank you, Jonathan. 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.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 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 HES Midstream's fourth quarter 2023 conference call. Today I'll review our 2023 operating performance and highlights, provide details regarding HES Midstream's 2024 plans and outlook through 2026. Jonathan will then review our financial results. 2023 was a year of continued strong performance and execution for HES Midstream. We delivered significant volume and capacity growth, including 15% year-over-year growth in gas processing volumes, and expansion of our compression capacity by approximately 100 million cubic foot per day, further enhancing our gas capture capability. As discussed in our guidance release, we've established our 2026 minimum volume commitments, which implies approximately 35% growth in gas volumes from 2023 through 2026. In addition, we've revised our 2025 MVCs upwards by an average of approximately 5% across our oil and gas systems, reflecting strong well performance and delivery by HESS and continued gas capture success. Now turning to HESS upstream highlights from their earnings release issued this morning. Bakken net production averaged 194,000 barrels of oil equivalent per day in the fourth quarter, which includes 19,000 barrels of oil equivalent per day from percent of proceeds volumes, which don't impact HESS midstream throughputs. For full year 2023, Bakken net production averaged 182,000 barrels of olequine per day, which was an increase of 18% year over year. Hess also reiterated their plans to continue to operate a four-rig drilling program in 2024. Now focusing on Hess Midstream's fourth quarter 2023 results, gas processing volumes averaged 387 million cubic foot per day, crude terminaling volumes averaged 120,000 barrels of oil per day, and water gathering volumes averaged 113,000 barrels of water per day. During the fourth quarter, HES volumes continued to grow while third parties declined, primarily driven by delays in new production coming online in the fourth quarter. Third parties remain approximately 10% in our fourth quarter, and we continue to expect them to make up approximately 10% of our volumes in the future. Also in the fourth quarter, with unseasonably good weather, we proactively took the opportunity to accelerate maintenance projects, including routine inspection and recertification of our rail cars and construction projects primarily associated with future WellConnex. For full year 2023, HES Midstream's gas processing volumes averaged 367 mcf per day. Crude terminaling volumes averaged 115,000 barrels of oil per day. and water gathering volumes averaged 95,000 barrels of water per day, resulting in full-year adjusted EBITDA of $1,022,000,000. Turning to HESS Midstream's guidance, in the first quarter of 2024, we expect volumes to be flat with the fourth quarter, reflecting the impact of extreme cold weather, including wind chill temperatures below minus 60 degrees Fahrenheit that we experienced in January, and to reflect that a significant part of winter is still ahead of us. For full year 2024, we expect volumes across our oil and gas systems to grow approximately 10% compared to 2023, primarily driven by HESA's development activity. We anticipate full year 2024 gas processing volumes to average between 395 and 405 million cubic foot per day, crude terminaling volumes to average between 120 and 130,000 barrels of oil per day, and water gathering volumes to average between 105 and 115,000 barrels of water per day. We project adjusted EBITDA for 2024 in the range of $1,125,000,000 to $1,175,000,000, an increase of 12.5% at the midpoint compared to full year 2023. The adjusted EBITDA increase is primarily driven by physical volume growth from HESA's development activity. Turning to HES Midstream's 2024 capital program. For full year 2024, capital expenditures are expected to total between $250 and $275 million. Approximately $125 million is allocated to ongoing capital expenditures for gathering system well connects and maintenance, while approximately $125 to $150 million is allocated to project-based capital expenditures, including gas gathering pipeline and compression expansions. The activity is focused on construction of multi-year projects, including approximately 40 miles of green-filled high-pressure gas gathering pipelines and two new compressor stations, which are expected to initially provide, in aggregate, an additional 85 million cubic foot per day of gas compression capacity when brought online in 2025 and expandable to approximately 140 million cubic foot per day. Longer term, we anticipate keeping capital expenditures stable at approximately 250 to $275 million through 2026. This amount includes our planned investment to add gas processing capacity of approximately 125 million cubic foot per day with the construction expected to start in 2025 and come online by mid 2027. The additional processing capacity is a disciplined investment that is underpinned by new MVC showing will be at capacity in 2026 and supports expected long-term growth for HESS Midstream from increasing HESS and third-party volumes in the Bakken. 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 2026 MVCs, which are underpinned by HESS's planned development activity and our continued focus on gas capture. resulting in expected sustainable cash flow generation and the potential to continue to return additional capital to our shareholders. I'll now turn the call over to Jonathan to read our financial results and guidance.