Hess Midstream Partners LP (HESM)

History and Background

Hess Midstream Partners LP (HMLP) was formed in 2015 as a limited partnership to own, operate, develop, and acquire midstream energy infrastructure assets. It was originally formed by Hess Corporation (HES) as a way to monetize its midstream assets. Key milestones include its initial public offering (IPO) in 2015, various dropdown transactions from Hess Corporation, and subsequent acquisitions to expand its asset base.

Core Business Areas

• Crude Oil Gathering and Processing: This segment involves the gathering of crude oil produced by Hess Corporation and third-party producers in the Bakken Shale play of North Dakota. It includes transportation of crude oil to downstream markets and processing of crude oil to meet specifications.
• Gas Gathering, Processing, and Transportation: This segment focuses on the gathering of natural gas and natural gas liquids (NGLs) produced in the Bakken. It includes processing of natural gas to remove NGLs and transportation of natural gas and NGLs to downstream markets.
• Water Handling and Transportation: This segment provides services for the handling and transportation of produced water from oil and gas wells for disposal or reuse by producers.

Leadership and Structure

Hess Midstream Partners LP is a publicly traded master limited partnership. Its management team is overseen by a Board of Directors. The partnership's operations are primarily conducted through its consolidated subsidiaries, with a significant portion of its business tied to agreements with its sponsor, Hess Corporation.

Key Offerings

• Crude Oil Gathering and Transportation: Hess Midstream provides essential infrastructure for the collection and transport of crude oil from production sites in the Bakken Shale. While specific market share data for HMLP's individual services is not readily available, it is a dominant player in its operational areas within the Bakken. Key competitors for gathering and transportation services often include other midstream operators with extensive pipeline networks in the same basins, such as Crestwood Equity Partners (CEQP) and Summit Midstream Partners (SMLP).
• Natural Gas Gathering and Processing: HMLP offers services to gather and process natural gas and NGLs. Similar to crude oil, its market share is concentrated within its operational footprint. Competitors in this space include companies like Crestwood Equity Partners (CEQP), Summit Midstream Partners (SMLP), and Oneok (OKE), who also operate extensive gathering and processing systems in key producing regions.
• Produced Water Services: HMLP provides services for the handling and transportation of produced water. This is a critical service for oil and gas operations, and its market share is largely dictated by the active drilling and production within its service territories. Competitors in this segment may include specialized water midstream companies and larger diversified midstream operators.

Industry Overview

The midstream energy sector is characterized by its role in transporting, storing, and processing crude oil, natural gas, and NGLs. The industry is heavily influenced by upstream production volumes, commodity prices, regulatory environments, and the demand for energy products. Infrastructure development, operational efficiency, and long-term customer contracts are key determinants of success.

Positioning

Hess Midstream Partners LP is strategically positioned as a leading midstream operator in the Bakken Shale, primarily serving its sponsor, Hess Corporation, and other third-party producers. Its integrated asset base, including gathering, processing, and transportation infrastructure, provides significant operational efficiencies and a competitive advantage within its core operating region. The company benefits from long-term fee-based contracts, which offer revenue stability.

Total Addressable Market (TAM)

The TAM for midstream services in the Bakken Shale is substantial, driven by ongoing production from the region. Hess Midstream Partners LP has a significant portion of this TAM within its operational areas, particularly due to its exclusive gathering and processing agreements with Hess Corporation. However, the overall TAM is influenced by the broader North American oil and gas production landscape.

Key Competitors

• Crestwood Equity Partners LP (CEQP)
• Summit Midstream Partners LP (SMLP)
• Oneok Inc. (OKE)

Competitive Landscape

Hess Midstream Partners LP benefits from its strong, long-term relationship with Hess Corporation, which provides a consistent base of business. Its integrated asset base in the Bakken is a significant advantage. However, it faces competition from other midstream operators who also have extensive networks in the region. Competitors like Crestwood and Summit Midstream have diversified asset portfolios and may offer a broader range of services. Oneok, a larger player, has a more extensive natural gas processing and transportation footprint across multiple basins.

Historical Growth: Hess Midstream Partners LP has experienced consistent growth in its operational volumes and financial performance, driven by organic expansion projects and strategic acquisitions. Its close relationship with Hess Corporation has provided a reliable base for growth.

Future Projections: Future projections for Hess Midstream Partners LP typically focus on continued expansion of its infrastructure to support Hess Corporation's and third-party production growth in the Bakken. Analyst estimates often consider potential new midstream projects and acquisitions. (Specific future projections require analyst reports.)

Recent Initiatives: Recent initiatives have likely included optimizing existing assets, expanding capacity to meet growing production, and potentially exploring opportunities for new service offerings or geographic expansion. (Specific recent initiatives would be detailed in company press releases and investor presentations.)

Hess Midstream Partners LP is a well-established midstream operator with a strong position in the Bakken Shale, significantly benefiting from its exclusive agreements with Hess Corporation. Its integrated infrastructure and fee-based revenue model provide stability and consistent cash flows. The company's primary strengths lie in its operational efficiency and strategic asset base. However, its heavy reliance on Hess Corporation represents a key vulnerability, and it must remain vigilant against competitive pressures and evolving regulatory landscapes in the dynamic energy market.

Data Sources:

• Hess Midstream Partners LP Investor Relations
• Company Filings (SEC)
• Financial News and Data Providers (e.g., Bloomberg, Refinitiv)

Disclaimers:

This analysis is based on publicly available information and is for informational purposes only. It does not constitute financial advice. Market share data is estimated and may not reflect precise figures. Financial performance and projections are subject to change based on market conditions and company performance.