(HESM) Hess Midstream Partners - Ratings and Ratios

Hess Midstream Partners LP (NYSE:HESM) is a critical player in the midstream energy sector, specializing in the ownership, development, and operation of infrastructure that connects oil and gas production to markets. The company provides fee-based services to Hess Corporation and other third-party customers, operating across three core segments: Gathering, Processing and Storage, and Terminaling and Export. This fee-based model is particularly attractive to investors, as it provides a level of revenue predictability independent of commodity prices.

The Gathering segment is the backbone of Hess Midstreams operations, with a network that includes natural gas, natural gas liquids, crude oil, and produced water gathering systems. The scale is significant: over 1,410 miles of gas and NGL pipelines with a capacity of 660 million cubic feet per day, complemented by 570 miles of crude oil gathering pipelines and 300 miles of produced water systems. This infrastructure is strategically located in the Bakken Formation, one of the most prolific shale plays in the United States, ensuring steady volumes and long-term utilization.

The Processing and Storage segment adds another layer of value through assets like the Tioga Gas Plant in North Dakota, which processes and fractionates natural gas, and a 50% stake in the Little Missouri 4 plant. The Mentor Storage Terminal in Minnesota further enhances the companys capabilities, offering propane storage and rail loading/unloading facilities. These assets not only diversify Hess Midstreams service offerings but also provide a buffer against market volatility by ensuring a steady stream of processing and storage fees.

The Terminaling and Export segment is where Hess Midstream connects production to global markets. The Ramberg terminal facility, Tioga rail terminal, and Dakota Access Pipeline connections are key pieces of this puzzle. The Johnsons Corner Header System, a crude oil pipeline header, further strengthens the companys ability to transport oil to downstream markets efficiently. This segment is particularly important for investors, as it highlights Hess Midstreams role in solving the critical issue of takeaway capacity in the Bakken region.

Founded in 2014 and headquartered in Houston, Texas, Hess Midstream has established itself as a reliable midstream operator with a strong focus on the Bakken Shale. Its market capitalization of $8.82 billion reflects its scale and the critical nature of its infrastructure. With a trailing P/E of 16.26 and a forward P/E of 11.56, the company offers a balance of current earnings and future growth potential. The P/S ratio of 6.06 indicates a premium valuation, which is consistent with the stability of its fee-based cash flows.

For investors and fund managers, Hess Midstream represents a compelling opportunity to gain exposure to the midstream sector with minimal direct commodity price risk. Its diversified assets, strategic locations, and long-term contracts with Hess Corporation and other producers create a resilient cash flow profile. Additionally,