Q4 2024 Hess Midstream LP Earnings Call
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question.
Speaker Change: Please press Star one one 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.
Jennifer Gordon: Thank you Gigi 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 Dot Hess midstream Dot com.
Speaker Change: 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.
Speaker Change: Fourth in the risk factors section of Hess midstream filings with the SEC.
Speaker Change: Also on today's conference call, we may discuss certain 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 of Opera.
Speaker Change: <unk> Officer, and Jonathan Stein, Chief Financial Officer, I'll, now turn the call over to John Gatling.
Speaker Change: Yeah.
John Gatling: Thanks, Jennifer and good afternoon, everyone and welcome to Hess Midstream fourth quarter 2024 conference call today I'll review, our 2020 for performance and highlights provide an overview of our 25 plans and longer term outlook through 2027.
Speaker Change: And give an update of Hess Corporation's results and outlook for the Bakken.
John Gatling: Jonathan will then review our financial results.
John Gatling: 2024 was a year of continued strong performance execution for Hess midstream.
John Gatling: We delivered significant volume growth, including 14% year over year growth in gas processing throughput. Additionally.
John Gatling: Additionally, we made excellent progress on key multiyear projects to strategically grow our gas gathering system, while advancing our planned gas processing expansion.
John Gatling: Today, we issued our guidance release, extending our N V C's and growth profile through 2027.
John Gatling: With gas volumes expected to grow by more than 25% from 2024.
John Gatling: Our long term growth remains driven by hesse's planned development activity and increasing third party volumes reinforcing the need for additional gas processing capacity.
John Gatling: Now turning to Hess upstream highlights.
John Gatling: In the fourth quarter Bakken net production averaged 208000 barrels of oil will come per day, including 20000 barrels of oil per day from percentage of proceeds contracts, which do not impact Hess midstream throughput.
John Gatling: For full year 2024, Bakken net production averaged 204000 barrels of oil per day, marking a 12% year over year increase.
John Gatling: Hess reaffirmed its plan to maintain a four rig drilling program in 2025 and projected first quarter 2025 net production to be in the range of 195 to 200000 barrels of oil a crude per day.
John Gatling: The decrease from the fourth quarter 2024 is primarily attributed to the severe winter weather in January.
Speaker Change: Now turning to Hess midstream results.
Speaker Change: In the fourth quarter, we delivered strong operational performance with gas processing volumes, averaging 447 million cubic foot per day crude terminalling volumes, averaging 127000 barrels of oil per day and water gathering volumes averaged 130000 barrels of water per day.
Speaker Change: For full year 2020 for Hess midstream gas processing volumes averaged 420 million cubic foot per day crude terminalling volumes averaged 123000 barrels of oil per day.
Speaker Change: Water gathering volumes averaged 125000 barrels of water per day, resulting in a full year adjusted EBITDA of $1 billion $136 million.
Speaker Change: Now moving to Hess midstream guidance for the first quarter of 2025, we anticipate volumes to be lower than the fourth quarter of 2024 due to the impact of severe winter weather in January and the possibility of further weather related impacts in the fourth quarter in the first quarter.
Speaker Change: For full year 2025, we anticipate approximately 10% growth in volumes across our oil and gas systems compared to 2024.
Speaker Change: Primarily driven by Hesse's development activity and increasing third party volumes.
Speaker Change: We expect gas processing volumes to average between 455, and 465 million cubic foot per day crude terminalling volumes to average between 130 140000 barrels of oil per day.
Speaker Change: And water gathering volumes to average between 120 and 130000 barrels of water per day.
Speaker Change: Driven by volume growth, our adjusted EBITDA for 2025 is projected to increase by 11% at the midpoint compared to 2024 with an expected range of $1 $235 billion to $1 billion and $285 million.
Building on our 2025 volume growth, we anticipate gas volumes to increase by approximately 10% in 2026 and 5% in 2027.
Speaker Change: Oil volumes are expected to grow by approximately 5% annually over the same period.
Speaker Change: This includes planned regulatory inspections and maintenance at the Tayo. Good gas plant in 2027, which is expected to temporarily reduce gas volumes and have a full year impact of approximately 10 million cubic foot per day.
Speaker Change: Given our growth trajectory, we anticipate exceeding our current gas processing capacity in 2027 to address this we are beginning construction. This year on the previously announced 125 million cubic feet.
Speaker Change: Per day cap a gas plant once operational in 2027, the new plant will support throughput growth from Hess and third parties through at least the end of the decade.
Speaker Change: Now turning to Hess Midstream is 2025 capital program total capital expenditures for the year are expected to be approximately $300 million with 125 million dedicated to ongoing expenditures for gathering system well connects in maintenance.
Speaker Change: And $175 million allocated to project based investments, including volume driven gas gathering and processing expansions.
Speaker Change: In 2025, we are focused on completing two new compressor stations and their associated gathering systems.
Speaker Change: Once operational these stations are expected to add a combined 85 million cubic cubic foot per day of gas gas compression capacity with the potential to expand up to approximately 140 million cubic foot per day <unk>.
Speaker Change: Additionally, our growth capital will support the construction and fabrication of the 125 million cubic foot per day cap a gas plant.
Speaker Change: These projects are expected to provide necessary gas gathering and processing capacity to meet growing demand.
Speaker Change: We plan to maintain annual capital expenditures in the range of approximately $250 million to $300 million through 2027.
This includes completing the cap a gas plant and starting construction on an additional compressor station in 2026.
Speaker Change: While capital allocation will shift as our growth projects progress, we generally expect spending to decline overtime as we finalized gathering expansions and focus on the commissioning of the capa gas plant in 2027.
Speaker Change: In summary, we remain focused on executing our strategy of disciplined low cost investments to meet growing basin demand, while maintaining reliable operations and strong financial performance.
Starting construction on an additional compressor station in 2026.
Speaker Change: With growth projected through 2027, and beyond we expect to generate sustainable cash flow and create opportunities to return additional capital to our shareholders.
While capital allocation will shift as our growth projects progress, we generally expect spending to decline overtime as we finalized gathering expansions and focus on the commissioning of the capa gas plant in 2027.
Jonathan Stein: Now I'll turn the call over to Jonathan to review, our financial results and guidance.
Jonathan Stein: Thanks, John and good afternoon, everyone.
In summary, we remain focused on executing our strategy of disciplined low cost investments to meet growing based on demand, while maintaining reliable operations and strong financial performance.
Speaker Change: Today, I will summarize our financial highlights on slide 24.
Speaker Change: Discuss our recently completed nomination process with us and provide details on our 2020 guidance and outlook through 2027, including our continued prioritization of ongoing incremental return of capital to shareholders.
With growth projected through 2027, and beyond we expect to generate sustainable cash flow and create opportunities to return additional capital to our shareholders.
Speaker Change: For 2024, we delivered strong results with full year net income of $659 million and adjusted EBITDA of $1 billion $136 million.
Now I'll turn the call over to Jonathan to review, our financial results and guidance.
Jonathan: Thanks, John and good afternoon, everyone.
Today, I will summarize our financial highlights on slide 24.
Speaker Change: This adjusted EBITDA represents a growth of approximately 12% from 2023 looking.
Jonathan: Discuss our recently completed nomination process with that and provide details on our 2020 guidance and outlook through 2020 seven, including our continued prioritization of ongoing and incremental return of capital to shareholders.
Speaker Change: Looking forward, we have line of sight to greater than 10% growth in net income adjusted EBITDA and adjusted free cash flow in each of 2025, and 2026, followed by greater than 5% growth in 2027.
Jonathan: For 2024, we delivered strong results with full year net income of $659 million and adjusted EBITDA of $1 billion $136 million.
Speaker Change: Reported by growing oil and gas throughput volumes gas.
Speaker Change: Gas volumes, which make up 75% of our revenues.
Speaker Change: Specced into grow by approximately 10%.
Jonathan: This adjusted EBITDA represents a growth of approximately 12% from 2023 looking.
Speaker Change: 2025, and 2026, followed by approximately 5% in 2027.
Jonathan: Looking forward, we have line of sight to greater than 10% growth in net income adjusted EBITDA and adjusted free cash flow in each of 2025, and 2026, followed by greater than 5% growth in 2027.
Speaker Change: We continue to execute our financial strategy that prioritizes returning capital to shareholders with a demonstrated track record of differentiated shareholder return.
Speaker Change: Since the beginning of 2020, one we have returned $1 $95 billion to shareholders through accretive repurchases. In addition to the combination of our 5% targeted annual distribution growth at.
Jonathan: Supported by growing oil and gas throughput volumes gas.
Jonathan: Gas volumes, which make up 75% of our revenues.
Jonathan: Specced it to grow by approximately 10% in each of 2025 and 2026, followed by approximately 5% in 2027.
Speaker Change: <unk> distribution level increases following injury approaches we have increased our distribution per class a share by approximately 55% since 2021 and by over 10% in 2024.
Jonathan: We continue to execute our financial strategy that prioritizes, you're trying to capital to shareholders with a demonstrated track record of differentiated shareholder return.
Speaker Change: As a result, our total shareholder return yield is one of the highest of our midstream peers. Furthermore, our leverage of approximately three one times adjusted EBITDA as one of the lowest among our peers highlighting our differentiated ability to deliver significant shareholder return, while also maintaining balance sheet strength.
Jonathan: Since the beginning of 2021, we have returned $1 $95 billion to shareholders through accretive repurchases. In addition to the combination of our 5% targeted annual distribution growth and 10 distribution level increases by atrium purchase we have increased our distribution per class a share by Apache.
Speaker Change: Earlier this month, we completed our first unit.
Jonathan: Similarly, 55% since 2021 and by over 10% in 2024.
Speaker Change: For instance transaction in 2025 of $100 million.
Speaker Change: That was accretive on both an adjusted free cash flow per class a share basis.
Jonathan: As a result, our total shareholder return yield is one of the highest of our midstream peers.
Speaker Change: And in earnings per class a share basis.
Jonathan: Furthermore, our leverage of approximately three one times adjusted EBITDA as one of the lowest among our peers highlighting our differentiated ability to deliver significant shareholder return, while also maintaining balance sheet strength.
Speaker Change: As we've done in the past our fourth quarter distribution increase included our targeted 5% annual growth for class a share and an additional increase utilizing excess adjusted free cash flow after distributions following the repurchase.
Jonathan: Earlier this month, we completed our first unit repurchase transaction in 2025 of $100 million.
Speaker Change: As a result of 'twenty 'twenty four and every year since we started our return of capital framework, our distribution per class a share growth has been approximately 10% significantly above our targeted 5% annual growth.
Jonathan: That was accretive on both an adjusted free cash flow per class a share basis.
Jonathan: And in earnings per class a share basis.
Jonathan: As we've done in the past our fourth quarter distribution increase included our targeted 5% annual growth per class a share and an additional increase utilizing excess adjusted free cash flow after distributions following the repurchase.
Speaker Change: As announced in our guidance release. This morning, we are continuing to prioritize shareholder return.
Speaker Change: Strong balance sheet, we have extended our annual distribution per class a share growth target of at least 5% in 2027 and are expecting greater than one point to $5 billion of financial Flexibilities in 2020 seven capital allocation that includes prioritization of potential unit repurchases on an ongoing basis while main.
Jonathan: As a result of 'twenty 'twenty four and every year since we started our return of capital framework, our distribution for class eight share growth has been approximately 10% significantly above our targeted 5% annual growth.
Speaker Change: Our long term leverage target of three times adjusted EBITDA.
Jonathan: As announced in our guidance released this morning, we are continuing to prioritize shareholder return and a strong balance sheet. We have extended our annual distribution per class a share growth target of at least 5% through 2027.
Speaker Change: Turning to our results for the fourth quarter net income was $172 million compared to $165 million for the third quarter adjusted EBITDA for the fourth quarter with $298 million compared.
Jonathan: We are expecting greater than 125 billion.
Jonathan: Our financial flexibility through 2027 for capital allocation that includes prioritization of potential unit repurchases on an ongoing basis, while maintaining our long term leverage target of three times adjusted EBITDA.
Speaker Change: Compared to $287 million for the third quarter.
Speaker Change: The increase in adjusted EBITDA relative to the third quarter was primarily attributable to the following.
Speaker Change: Total revenues excluding pass through revenue increased by approximately $15 million, primarily driven by higher throughput volumes, resulting in segment revenue changes as follows.
Jonathan: Turning to our results for the fourth quarter net income was $172 million compared to $165 million for the third quarter adjusted EBITDA for the fourth quarter with $298 million compared to $287 million for the third quarter the.
Speaker Change: Processing revenues increased by approximately $9 million and gathering revenues increased by approximately $6 million.
Speaker Change: Total costs and expenses, excluding depreciation and amortization pass through costs and net of our proportional share of L. A M. Four earnings increased by approximately $4 million, primarily from higher G&A allocation under our omnibus and employee come in agreement, partially offset by lower general maintenance.
Jonathan: The increase in adjusted EBITDA relative to the third quarter was primarily attributable to the following.
Jonathan: Total revenues excluding pass through revenue increased by approximately $15 million, primarily driven by higher throughput volumes, resulting in segment revenue changes as follows.
Jonathan: Processing revenues increased by approximately $9 million and gathering revenues increased by approximately $6 million.
Speaker Change: Resulting in adjusted EBITDA for the fourth quarter of $298 million.
Speaker Change: Our growth of adjusted EBITDA.
Jonathan: Total costs and expenses, excluding depreciation and amortization pass through costs and net of our proportional share of <unk> earnings increased by approximately $4 million, primarily from higher G&A allocation under our omnibus and employees to come in agreement.
Speaker Change: Margin for the fourth quarter was maintained at approximately 80% above our 75% target highlighting our continued strong operating leverage.
Speaker Change: Fourth quarter capital expenditures were approximately $84 million and net interest excluding amortization of deferred finance cost was approximately $50 million, resulting in adjusted free cash flow of approximately $164 million.
Jonathan: Partially offset by lower general maintenance.
Jonathan: Resulting in adjusted EBITDA for the fourth quarter of $298 million.
Jonathan: Our growth adjusted EBITDA margin.
Speaker Change: Drawn balance of $15 million on our revolving credit facility at year end.
Jonathan: For the fourth quarter was maintained at approximately 80% above our 75% target highlighting our continued strong operating leverage.
Speaker Change: Turning to a range between 25 and beyond the majority of our systems, representing approximately 85% of our revenues are fixed fees with weights increase each year based on an inflation escalator capped at 3%, resulting in steadily increasing rate through 2033.
Jonathan: Fourth quarter capital expenditures were approximately $84 million and net interest excluding amortization of deferred finance costs was approximately $50 million.
Jonathan: And adjusted free cash flow of approximately $164 million.
Speaker Change: For our Terminalling and water gathering systems that represent approximately 15% of our revenue we continued to reset our rates through our annual rate redetermination process in 2020 three.
Jonathan: We had a drawn balance of $15 million on our revolving credit facility at year end.
Jonathan: Turning to our rates for 2025 and beyond the majority of our systems. They represent approximately 85% of our revenues are fixed fees with rates increase each year based on an inflation escalator capped at 3%, resulting in steadily increasing rates through 2033.
Speaker Change: On this rate setting process for 2025 tariff rates across all our systems are higher in 2024 right.
John Gatling: Turning to volumes as John described we expect continued growth in oil and gas throughput from Hess and third parties.
Jonathan: Our terminalling and water gathering systems that reps.
John Gatling: Oil volumes are expected to grow by approximately 10% in 2025.
Jonathan: Approximately 15% of our revenues, we continued to reset our rates through our annual rate redetermination process through 2033 base.
John Gatling: Approximately 5% in each of 2026 and 2027.
John Gatling: <unk> is expected to grow by approximately 10% in each of 2025 and 2026, followed by approximately 5% in 2027.
Jonathan: Based on this rate setting process for 2025 tariff rates across all our systems are higher than 2024 right.
John Gatling: Based on this expected growth rate, we expect to exceed our current gas processing capacity in 2027.
Jonathan: Turning to volumes as John described we expect continued growth in oil and gas throughput from Hess and third parties.
John Gatling: Begin construction this year as planned of our new 125 million cubic foot per day gas processing plant is expected to be online in 2027.
Jonathan: Oil volumes are expected to grow by approximately 10% in 2025 and approximately 5% in each of 2026 and 2027.
John Gatling: This investment in gas processing to meet a growing volumes is underpinned by our downside protection from M. A c's with half across all of our systems that can hand to be set at 80% of nominate volumes that three years in advance.
Jonathan: <unk> is expected to grow by approximately 10% in each of 2025 and 2026, followed by approximately 5% in 2027.
Based on this expected growth rate, we expect to exceed our current gas processing capacity in 2027.
John Gatling: 33.
John Gatling: Our guidance released this morning, we provided MTS he's been here 2025 and 2027.
Jonathan: In construction this year as planned of our new 125 million cubic foot per day gas processing plant is expected to be online in 2027.
John Gatling: Part of the nomination process I mean, it seems in 2020, five and 'twenty 'twenty six we reviewed and where required increase well Emmy season in 2020 seven with newly established based on 80% of the has nominated volumes for each system in that year.
Jonathan: This investment in gas processing to meet a growing volumes is underpinned by our downside protection from MVC with half across all of our systems that continue to be set at 80% of nominate volumes at three years in advance through 2033.
John Gatling: Turning to our financial guidance for 2025 and beyond.
John Gatling: Full year 2025, we expect net income of $715 million to $765 million and adjusted EBITDA of $1 billion and $275 billion to $1 billion $285 million.
Jonathan: Guidance released this morning, we provide <unk> for the year 2025, and 2027 as part of the nomination process Emmy season in 2025, and 2026 reviewed and where required increased emphasis in 2027 with newly established based on 80% of the Hess nominate volumes for each system in that.
This adjusted EBITDA growth of approximately 11% at the midpoint of our range.
John Gatling: Pointed by continued growing revenues from physical volume growth across oil and gas system as John described.
Jonathan: Here.
Jonathan: Turning to our financial guidance for 2025 and beyond.
John Gatling: We continue to target a gross adjusted EBITDA margin of approximately 75% in 2025.
Jonathan: For the full year 2025, we expect net income of $715 million to $765 million and adjusted EBITDA of $1 billion and 235 to $1 $285 million.
For 2025 with total expected capital expenditures of approximately $300 million.
John Gatling: We expect to generate adjusted free cash flow of between $735 million and $785 million in excess of adjusted free cash flow of approximately $135 million.
Jonathan: This adjusted EBITDA growth of approximately 11% at the midpoint of our range and supported by continued growing revenues from physical volume growth across oil and gas systems as John described.
John Gatling: After fully funding our targeted growing distribution.
Jonathan: We continue to target a gross adjusted EBITDA margin of approximately 75% in 2025.
John Gatling: We are increasing adjusted EBITDA, we expect our leverage to 2025 to be below three times adjusted EBITDA target on a full year basis.
Jonathan: For 2025 with total expected capital expenditures of approximately $300 million.
John Gatling: For the first quarter of 2025, we expect net income to be approximately $160 million to $170 million and adjusted EBITDA to be approximately $285 million to $295 million, including the impact of severe winter weather in January and then potential for additional winter weather events through the <unk>.
Jonathan: We expect to generate adjusted free cash flow of between $735 million and $785 million in excess of adjusted free cash flow of approximately $135 million.
Jonathan: After fully funding our targeted growing distributions.
Jonathan: With increasing adjusted EBITDA, we expect our leverage by 2025 to be below our three times adjusted EBITDA target on a full year basis.
John Gatling: Water.
John Gatling: For the remainder of 2025, we expect adjusted EBITDA, each quarter, consistent with increasing volumes across oil and gas systems.
Jonathan: For the first quarter of 2025, we expect net income to be approximately $160 million to $170 million and adjusted EBITDA to be approximately $285 million to $295 million, including the impact of severe winter weather in January and the potential for additional winter weather events through the <unk>.
John Gatling: Beyond 2025, we have clear visibility to volume adjusted EBITDA and adjusted free cash flow growth that supports our financial strategy.
John Gatling: Supported by volumes that continued to grow in both oil and gas to at least 2027 fees that are steadily increasing based on our annual inflation escalator.
Jonathan: Water.
Jonathan: For the remainder of 2025, we expect growing adjusted EBITDA, each quarter, consistent with increasing volumes across oil and gas systems.
John Gatling: Targeted growth adjusted EBITDA margin of approximately 75%, we expect greater than 10% growth and interestingly, even in 2020 six followed by greater than 5% growth in 2020 seven.
Jonathan: Beyond 2025, we have clear visibility to volume adjusted EBITDA and adjusted free cash flow growth that supports our financial strategy.
John Gatling: In line with growing has gas volumes supported by incremental gas processing capacity and.
Jonathan: Supported by volumes that continued to grow in both oil and gas to at least 2027 fees that are steadily increasing based on our annual inflation escalator.
John Gatling: The increase annually with inflation, we expect continued growth in EBITDA at least through the rest of the decade.
John Gatling: With growing adjusted EBITDA and relatively stable capital expenditures are expected to trend lower in 2027.
Jonathan: Targeted growth adjusted EBITDA margin of approximately 75%, we expect greater than 10% growth in adjusted EBIT in 2026, followed by greater than 5% growth in 2027 in.
John Gatling: We expect adjusted free cash flow to grow by greater than 10% in 2026 by greater than 5% in 2027, and then continue to grow with the rest of the decade, providing significant financial flexibility to continuing returning capital to shareholders and.
Jonathan: In line with growing has gas volumes supported by incremental gas processing capacity and rates have increased annually with inflation. We expect continued growth in EBITDA at least through the rest of the decade.
John Gatling: In addition, we are continuing to prioritize shareholder return with a return on capital framework.
Jonathan: With growing adjusted EBITDA and relatively stable capital expenditures are expected to trend lower in 2027, we expect adjusted free cash flow to grow by greater than 10% in 2026 by greater than 5% in 2027, and then continue to grow with the rest of the decade, providing significant financial flexibility.
John Gatling: First we are continuing to grow our base distribution by extending our targeted distribution growth of at least 5%, Italy per class a share through 2027.
John Gatling: Second we have financial flexibility for potential significant incremental shareholder returns and a growing base distribution.
Jonathan: So continuing to return capital to shareholders.
John Gatling: With expected adjusted EBITDA and adjusted free cash flow growth.
Jonathan: In addition, we are continuing to prioritize shareholder returns with a return on capital framework first we're continuing to grow our base distribution by extending our targeted distribution growth of at least 5% annually per class a share.
John Gatling: Greater than 10% in 2026 and greater than 5% in 2027 in excess of our targeted annual distribution growth of at least 5% we.
John Gatling: We expect to generate excess adjusted free cash flow beyond our distribution.
Jonathan: In 2007.
Jonathan: Second we have financial flexibility for potential significant incremental shareholder returns beyond a growing base distribution.
John Gatling: And leverage expected to decline to below two five times adjusted EBITDA at the end of 2026 and they continue below this level through 2027, providing leverage capacity relative to our long term three times adjusted EBITDA leverage target.
Jonathan: With expected adjusted EBITDA and adjusted free cash flow growth.
Jonathan: Greater than 10% in 2026 and greater than 5% in 2027 in excess of our targeted annual distribution growth of at least 5% we.
John Gatling: As a result, with a growing cash balance and significant leverage capacity, we expect to have greater than $1 billion to $5 billion of financial flexibility through 2027 for capital allocation that includes the potential for multiple unit repurchases per year through this period and the potential for incremental distribution level.
Jonathan: We expect to generate excess adjusted free cash flow beyond our distribution.
Jonathan: And leverage expected to decline to below two five times adjusted EBITDA at the end of 2026 and the continued below this level through 2027, providing leverage capacity relative to our long term three times adjusted EBITDA leverage target.
John Gatling: Increases associated with these new purchases.
John Gatling: And our targeted at least 5% annual distribution per class a share growth.
Jonathan: As a result, with a growing cash balance and significant leverage capacity, we expect to have greater than $1 billion to $5 billion of financial flexibility through 2027 for capital allocation that includes the potential for multiple unit repurchases per year through this period and the potential for incremental distribution level.
John Gatling: In summary, we are pleased to have delivered a strong 2024 and look forward to a visible trajectory of growth and operational and financial metrics that underpins, our unique and differentiated financial strategy with a focus on consistent and ongoing return of capital to our shareholders. This concludes my remarks, we'll be happy to answer any questions.
Jonathan: Increases associated with these repurchases beyond our targeted at least 5% annual distribution per class a share growth.
John Gatling: I will now turn the call over to the operator.
Speaker Change: Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced towards the draw. Your question. Please press star one one again.
Jonathan: In summary, we are pleased to have delivered a strong 2024 and look forward to a visible trajectory of growth and operational and financial metrics that underpins, our unique and differentiated financial strategy with a focus on consistent and ongoing return of capital to our shareholders. This concludes my remarks, we'll be happy to answer any questions.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Naomi Maher fascia from UBS.
Jonathan: I will now turn the call over to the operator.
Jonathan: Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced towards the draw. Your question. Please press star one one again.
Naomi Maher: Hi, Good afternoon. Thanks for taking my question. That's my question is on you might be working with our stock.
Naomi Maher: Seven at least even slightly increased.
Speaker Change: Thanks, Amit.
Speaker Change: You can get to 10% EBITDA growth.
Jonathan: Please stand by while we compile the Q&A roster.
Speaker Change: So just kind of curious on how.
Speaker Change: How you think about this.
Speaker Change: Our first question comes from the line of Naomi Maher fascia from UBS.
Speaker Change: No.
Speaker Change: That could be potentially see an upside to EBITDA doubled.
Hi, This is Jonathan I'm going to start maybe I'll just walk through kind of the math of how we set the embassies and what those mean in terms of the volume growth I'll turn over to John to talk about underpinning that growth from a business point of view. So as we said I'm going to use gas processing as we've said in the past gas and 75% of our revenues.
Naomi Maher: Hi, good afternoon, Thanks for taking my question.
Speaker Change: Question on you might be working with academic centers.
Kevin: Thank you Kevin.
I think that I don't know.
Speaker Change: I was hoping you could get to 10% EBITDA growth.
Kevin: So just kind of curious on how.
Kevin: How you think about it.
Speaker Change: So focusing on that we provided guidance of 10% growth in 2026, and 5% growth in 2027.
Speaker Change: No.
Speaker Change: That could be potentially see an upside to your EBITDA goes down.
Speaker Change: Hi, This is Jonathan I'm going to start maybe I'll just walk through kind of the math of how we set the embassies and what those mean in terms of the volume growth I will turn it over to John to talk about underpinning that growth from a business point of view. So as we said I'm going to use gas processing as we've said in the past gas and 75% of our revenues.
Speaker Change: So if you look at our <unk> you can see they provide visibility to the volumes that underpin that growth.
Speaker Change: If you take for example in 2026.
Speaker Change: First up at 80%, that's 495 million cubic feet per day, compared with the midpoint of our 2025 guidance that implies more than seven 5% growth and we look at 2020 seven are everything goes up there that's 505 million cubic feet per day, you need to add back the 10 million cubic feet per day a maintenance.
Speaker Change: So focusing on that we provided guidance of 10% growth in 2026, and 5% growth in 2027. So if you look at our <unk> you can see they provide visibility to the volumes that underpinned that growth. So if you take for example, 2026, our MVC grossed up.
Speaker Change: Impact that John mentioned for the T. G. P maintenance that gets you to 515 million cubic feet per day, which is about a 4% annual growth rate on top of that.
Speaker Change: 80%, that's 495 million cubic feet per day, compared with the midpoint of our 2025 guidance that implies more than seven 5% growth and we look at 2027 are everything goes up there that's 505 million cubic feet per day, you need to add back the 10 million cubic feet per day.
Speaker Change: In additional third party volumes and that gets into the growth rate with the Hess volumes really being the primary driver of our growth through that period. So with that now I'll turn it over to John who can give you the background on kind of what's driving that growth.
John Gatling: Sure. Thanks, Jonathan.
John Gatling: It's a good question, we continue to be focused on the four rig development plan and as productivity and efficiency improves drilling longer laterals improve cycle time overall productivity of the wells overall, the hesse's program is continuing to generate growth both on the oil side and on the gas side.
Speaker Change: Maintenance impact that John mentioned for the T. G. P maintenance that gets you to 515 million cubic feet per day, which is about a 4% annual growth rate on top of that add in additional third party volumes and that gets into the growth rate with the Hess volumes really being the primary driver of our growth through that period, so with that now.
Speaker Change: I'll turn over to John who can give you the background on kind of what's driving that growth.
John Gatling: And as Jonathan mentioned, we've got oil is growing.
John Gatling: 10% from 24 to 25, 5% from 25 to 626, 5% from from 26 to 27. In addition, our grow our gases is outpacing oil a little bit as expected.
John: Sure. Thanks, Jonathan Yes, I mean, it's a good question, we continue to be focused on the four rig development plan.
John: And as productivity and efficiency improves drilling longer laterals improve cycle time overall productivity of the wells overall, the hesse's program is continuing to generate growth both on the oil side and on the gas side.
John Gatling: <unk> in the basin are continuing to increase as the wells mature you are naturally increases over time.
John Gatling: So it's it's playing out exactly as we expected and so from our perspective the growth trajectory supports the additional infrastructure that will need both from a field gathering perspective, but also from additional processing. So theres a theres good line of sight between now and 2027 and actually even beyond that.
John: And as Jonathan mentioned, we've got oil is growing.
John: 10% from 24 to 25, 5% from 25 to 626, 5% from from 26 to 27. In addition, our grow our gases is outpacing oil a little bit as expected.
John: <unk> in the basin are continuing to do that to increase as the wells mature <unk> naturally increases over time.
John Gatling: Showing the growth trajectory based on the based on the <unk> that we set in the guidance, we've given in the AR and the earnings call.
John: So it's playing out exactly as we expected and so from our perspective the growth trajectory supports the additional infrastructure that will need both from a field gathering perspective, but also from additional processing. So theres a theres. Good line of sight between now and 2027 and actually even beyond that show.
Speaker Change: Okay. That's helpful.
Speaker Change: And then my second question is on your long term outlook on Bakken.
Speaker Change: I know there has been quite some activity in Bakken recently can you help us understand how have done that.
Speaker Change: Thinking about drilling in the Bakken either organically.
Speaker Change: Yes.
Speaker Change: It's not that we're thinking of expanding beyond bucket I didn't find it doesn't yeah.
Showing the growth trajectory based on the based on the <unk> that we set in the guidance we've given in the in the earnings call.
Speaker Change: Sure well, maybe I'll, maybe I'll hit the last part of your question first I mean at this point no. There's no. There's no plans to expand outside of the Bakken I think we're really really happy with the position we've got.
John: Okay. That's helpful.
John: And then my second question is on your long term outlook on platform.
Speaker Change: Our strategic footprint is sits right on top of some of the best rock in the basin. We obviously have the support of Hess as a as a as.
John: I know there has been quite some activity in Bakken recently can you pass that on.
John: Thinking about drilling in the Bakken either organically.
Speaker Change: The sponsor and then a significant.
John: Yes.
John: It's not that much.
Speaker Change: Partner for us to work with.
John: Finding beyond Bulks I didn't find it.
Speaker Change: From our perspective, the growth trajectory is really underpinned by by Hess production, There's additional third party opportunities out there and we're going to continue to leverage our infrastructure to capture those third party volumes and we do anticipate third parties will grow about at the same pace that Hess is growing but it really is underpinned the organic growth is really underpinned by by Hess.
John: Sure well, maybe I'll, maybe I'll hit the last part of your question first I mean at this point no. There's no. There's no plans to expand outside of the Bakken and I think we're really really happy with the position we've got.
John: Our strategic footprint is sits right on top of some of the best rock in the basin. We obviously have the support of Hess as a as a as.
To your question on organic versus M&A activity, we continue to look at opportunities in the basin. We're always interested in looking at bolt on opportunities, but from our perspective with the growth built in the bar is extremely high our disciplined approach.
John: As a sponsor and a significant.
John: Partner for us to work with.
John: From our perspective, the growth trajectory is really underpinned by by Hess production, There's additional third party opportunities out there and we're going to continue to leverage our infrastructure to capture those third party volumes and we do anticipate third parties will grow about at the same pace that Hess is growing but it really is underpinned the organic growth is really underpinned by house.
Speaker Change: Is is really kind of the thing thats that stabilized us over the years.
Speaker Change: As I mentioned, we're in the process of building our own gas plant, it's right sized at 125 million cubic foot per day. It plays right in naturally with the what's the growth trajectory that we've got planned through the end of the end of the decade and even beyond that so so from our perspective, we're really happy with the infrastructure, but.
John: To your question on organic versus M&A activity, we continue to look at opportunities in the basin. We're always interested in looking at bolt on opportunities, but from our perspective with the growth built in the bar is extremely high our disciplined approach.
Speaker Change: We're always interested to look at bolt on opportunities that makes sense and integrate nicely into our strategic footprint.
John: <unk> is really kind of the thing that's stabilized us over the years.
Speaker Change: Yeah.
Speaker Change: Great.
John: As I mentioned, we're in the process of building our own gas plant, it's right sized at 125 million cubic foot per day. It plays right in naturally with what's the growth trajectory that we've got planned through the end of the end of the decade and even beyond that so so from our perspective, we're really happy with the infrastructure, but.
Speaker Change: Have a great day.
Speaker Change: Okay. Thank you so much.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Doug Irwin from Citi.
Speaker Change: Thanks for the question, maybe one on Capex to start I was wondering if you could maybe provide a little bit more color on just what's driving the capex budget higher near term.
John: We're always interested to look at bolt on opportunities that makes sense and integrate nicely into our strategic footprint.
John: Yeah.
John: Great.
Speaker Change: So if the 25 guide moving higher and I think you came in a little above budget on 24, and I'm just curious to get your view on longer term growth Capex might look like on some of these projects come online.
John: Great.
John: Okay. Thank you so much.
John: Thank you one moment for our next question.
Doug: Our next question comes from the line of Doug <unk> from Citi.
Speaker Change: Is it fair to assume there should be a pretty meaningful step down beyond 27, as you come out of a relatively higher growth phase with the <unk>.
Speaker Change: Thank you. Thanks for the question maybe one on Capex to start I was wondering if you could maybe provide a little bit more color on just what's driving the capex budget higher near term.
Speaker Change: Assessing fill it out.
Speaker Change: Yes, maybe I'll start and then hand, it over to Jonathan for a little bit of a longer term capex view from our perspective. The main component of Capex in both 24, and 25 has really been activity phasing.
Doug: Of the 25 gigabit and higher and I think you came in a little bit.
Doug: Budget of 24, and I'm, just curious to get your view on longer term growth Capex might look like on some of these projects come online.
Speaker Change: <unk> has really done a great job from an overall efficiency perspective, theyre drilling faster wells, bringing the wells on sooner and we're also seeing.
Doug: Is it fair to assume we should see a pretty meaningful step down beyond 27, as we come out of a relatively higher growth phase with the <unk>.
Jonathan Stein: Good productivity from the wells drilling longer laterals. So that's we're really just trying to maintain the pace with with Hess on the on the growth side and third parties are generally following that same trajectory as well. So that's a little bit of the acceleration into 2024, and then 25 kind of represents the same I mean, you know as we start to kick off construction and fabrication of.
Doug: Assessing build out.
Doug: Yes, maybe I'll start and then hand, it over to Jonathan for a little bit of a longer term capex view from our perspective. The main component of Capex in both 'twenty four and 'twenty five has really been activity phasing.
Doug: <unk> has really done a great job from an overall efficiency perspective, theyre drilling faster wells, bringing the wells on sooner and we're also seeing.
Jonathan Stein: Of our gas plant expansion will be doing some spending in 2025 for that.
Jonathan Stein: We think that approximately $300 million in 2025 is about right. We do anticipate through 'twenty seven spending to be an approximate $250 million to $300 million range and then after that we do expect the bulk of our growth infrastructure to be in place that will actually be able to support the growth trajectory through the end of the decade.
Jonathan: Good productivity from the wells drilling longer laterals. So that's we're really just trying to maintain the pace with with Hess on the on the growth side and third parties are generally following that same trajectory as well. So that's a little bit of the acceleration into 2024, and then 25 kind of represents the same I mean, as we start to kick off construction and fabrication of.
Jonathan Stein: With that infrastructure, there will be some opportunity for additional compression as as the as Hess decides where its going to drill and how its going to operationalize. The opportunity has ahead of it ahead of it.
Jonathan: Of our gas plant expansion will be doing some spending in 2025 for that.
Jonathan: We think that approximately $300 million in 2025 is about right. We do anticipate through 'twenty seven spending to be an approximate $250 million to $300 million range and then after that we do expect the bulk of our growth infrastructure to be in place that will actually be able to support the growth trajectory through the end of the decade.
Jonathan Stein: But we would expect post 2027 to see to see a step down in capex activity after that Jonathan if there's anything you wanted to add to that.
Jonathan Stein: So that was good I think you know as we've highlighted of the growth of our capital budget on that $25 million of ongoing capital.
Jonathan: With that infrastructure, there will be some opportunity for additional compression as as the as Hess decides where its going to drill and how it is going to operationalize. The opportunity has ahead of ahead of it.
Jonathan Stein: So that's kind of capital that will have all going through 'twenty, seven and beyond and as John said, it's really the project capital to be some phasing over the next couple of years, but in general expect that to decline in some of these projects come online and then while there may be some additional growth capital 27, and it certainly would be <unk>.
Jonathan: But we would expect post 2027 to see to see a step down in capex activity after that Jonathan if there's anything you wanted to add to that.
Jonathan: So that was good I think as we've highlighted of the growth of our capital budget on that $25 million is ongoing capital.
Jonathan Stein: Relative to where we are right now and I think that's really just to highlight I think that's one of the exciting things, but we're talking about today.
Jonathan Stein: Not only that we could talk about visibility through 2020 seven are both on the volume side at on the financial side, but if we could talk about that really visibility through the rest of the decade and really there you know we've talked about our continued gas growth with the new plant coming on line that supports growth for the rest of the decade, we just talked about capital.
Jonathan: So that's kind of capital that will have all going through 'twenty, seven and beyond and as John said, it's really the project capital to be some phasing over the next couple of years, but in general expect that to decline in some of these projects come online and then while there may be some additional kind.
Jonathan: Growth capital 27, and it certainly would be declining relative to where we are right now and I think that's really just to highlight I think that's one of the exciting things, but we're talking about today.
Jonathan Stein: The next couple of years, but that declining so with growing EBITDA for the rest of the decade and declining capital that means that we'll have growing free cash flow really not just through 2027, as we've talked about but really visibly now for the rest of the decade and that will really provide the opportunity for us to continue to find distribution growth Takeda to fund potentially thinking about or are you trying to capital.
Jonathan: Not only that we could talk about visibility through 2027 are both on the volume side at other financial side, but we can talk about now really visibility through the rest of the decade and really there we've talked about our continued gas growth with the new plant coming on line that supports growth for the rest of the decade, we just talked about capital.
Jonathan Stein: <unk> not only through the 27 minutes, we've extended that today, but really visibility through the rest of the decade. So it's really an exciting time in our journey really exciting time, where we are right now that we can give them visibility not just through 2027, which is already differentiate but now we really have clear line of sight to our volume and financial metric go through the rest of the decade.
Jonathan: The next couple of years, but that declining so with growing EBITDA for the rest of the decade and declining capital that means that we'll have growing free cash flow really not just through 2027, as we've talked about but really visibly now through the rest of the decade and that will really provide the opportunity for us to continue to fund distribution growth to cater to fund potentially I come out to be trying to capital.
Jonathan Stein: Okay, that's really helpful. Thanks.
Speaker Change: And my second question I guess I just wanted to get your latest thoughts around the capital allocation program that you've extended into 2007.
Jonathan: <unk> not only through the 27 years, we've extended that today, but really visibility through the rest of the decade. So it's really an exciting time in our journey really exciting time, where we are right now that we can give the visibility not just through 2027, which is already differentiate it but now we really have clear line of sight to our volume and financial Mexico through the rest of the decade.
Speaker Change: Yes in the context of all the potential changes that could happen at the sponsor level this year.
Speaker Change: Just curious how heavily sponsor actions might factor into your decisions moving forward.
Speaker Change: And specifically I'm, just wondering if buybacks potentially become less attractive relative to other uses of cash down. The line. If you are essentially having to repurchase from the public rather than directly from the sponsors.
Jonathan: Okay, that's really helpful. Thanks.
Speaker Change: And my second question I guess I just wanted to get your latest thoughts around the capital allocation program that you've extended into 2007 and I guess in the context of all the potential changes that could happen at the sponsor level. This year.
Speaker Change: Sure Yeah, no, we're really I'm really proud of our return on capital framework.
Speaker Change: With our two parts you know really got 5% annual distribution.
Speaker Change: Just curious how heavily sponsor actions might factor into your decisions moving forward.
Speaker Change: Both that we can achieve even at MVC levels. So that's really we are highly confident in our ability to deliver that and that our income that's what you're trying to capital to repurchases and then I think what we've done and we've gotten a lot of very positive feedback on that is matching off those repurchases with dividend increases that are really funded by the lower share count.
Speaker Change: And specifically I'm, just wondering if buybacks potentially become less attractive relative to other uses of cash down. The line. If you are essentially having to repurchase from the public rather than directly from the sponsors.
Speaker Change: Sure Yeah, no we're really really.
Speaker Change: Really proud of our return on capital framework.
Speaker Change: At maintaining our total distributed cash at the same level. So it's allowed us that even though we've targeted at least 5% distribution growth really since 2021. Since we started this program our average distribution growth per per year has really been approximately 10% really almost double what we have just had in our base.
Speaker Change: With our two parts really got 5% annual distribution growth that we can achieve even at MVC levels. So that's really we are highly confident in our ability to deliver that and that our ankle out to return of capital to repurchases and then I think what we've done and we've got a lot of very positive feedback on that is matching off those repurchases with dish.
Speaker Change: So now looking forward, we talked about one point to $5 billion at least our financial flexibility.
Speaker Change: That increases that are really funded by the lower share count and maintaining our total distributed cash at the same level. So it has allowed us that even though we've targeted at least 5% distribution growth really since 2021. Since we started this program our average.
Speaker Change: Back to utilize that for certainly unit repurchases going forward and multiple times per year as we've done in the past and then matching those with a distribution level increases as I've described.
Speaker Change: In terms of how does that change potentially as are our shareholder earnings change.
Speaker Change: Our distribution growth per per year has really been approximately 10% really almost double what we have just had our base. So that looking forward, we talked about one point to $5 billion at least our financial flexibility.
Speaker Change: No real change to that I think is there a potential in the future that we would incorporate the public I mean, certainly as ill sponsor kind of percentages change over time, that's certainly something that we would consider in the past. We did it include the public and the repurchases really because we were building up our.
Speaker Change: Back to utilize that for certainly unit repurchases going forward and multiple times per year as we've done in the past and then matching those with a distribution level increases as I described I think in terms of how does that change potentially as are our shareholder earnings change well, yeah, I think no real change to that.
Speaker Change: The liquidity of the public float and the size at this point you know we are at the public being 48% of the ownership because I think as we go forward that becomes less of a concern. So certainly there's an opportunity to bring the public into the repurchase program something we would certainly consider not something we're taking a step right now, but certainly something that we'd consider it particularly.
Speaker Change: I think is there a potential in the future that we would incorporate the public I mean certainly as.
Speaker Change: The sponsor kind of percentages change over time, that's certainly something that we would consider in the past. We did it include the public and the repurchases really because we were building up our AR.
Speaker Change: As ownership would continue to change, but you know really it's something in terms of the program no real change to the program may adjust as I described depending on the ownership changes, but really continuing to execute the program and deliver the really as I talked about one of the highest total shareholder yield in the sector.
Speaker Change: Liquidity of the public float and the size at this point, we are at the public being 48% of the ownership.
Speaker Change: Certainly as we go forward that becomes less of a concern. So certainly there's an opportunity to bring the public into the repurchase program something we would certainly consider that something we're taking a step right now, but certainly something that we'd consider it particularly as ownership would continue to change, but you know really it's something in terms of the program no real change to the program may adjust.
Speaker Change: Got it that's all for me.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Jackie Colette Us from Goldman Sachs.
Speaker Change: As I described depending on the ownership changes, but really continuing to execute the program and deliver the really as I talked about one of the highest total shareholder yield in the sector.
Jackie Colette: Hi, Thank you for taking my question first I just want to start you given your expectation to reach below two five times in 26, how do you think about the use of leverage going forward as you get below that target.
Speaker Change: Got it that's all for me at this time.
Speaker Change: Yeah.
Speaker Change: Thank you one moment for our next question.
Jackie Colette: But so what we've said is you know if you think about the $1 billion to $5 billion of capacity that we have that's really Ah if at all funded by two elements first is leveraged capacity and that excess free cash flow. After distributions. If you kind of do the math with the EBITDA growth that we've given to them by about a half a turn let's say at least.
Speaker Change: Our next question comes from the line of Jackie <unk> from Goldman Sachs.
Speaker Change: Hi, Thank you for taking my question first just wanted to start you know given your expectation to reach below two five times in 26, how do you think about the use of leverage going forward as you get below that target.
Jackie Colette: And what you'll come up with is about half of that comes from leverage capacity. They have for the 1.25 billion. The other half is really as our free cash flow exceeds our growth exceeds our 5% target distribution that gives you about the other half of that 1.25.
Speaker Change: But so what we've said is you know if you think about the $1 billion to $5 billion of capacity that we have that's really it is all funded by two elements first is leveraged capacity and that excess free cash flow. After distributions. If you kind of do the math with the EBITDA growth that we've given an assumed by about a half a turn let's say at least.
Speaker Change: You know we're in a great position to be able to you know primary objective is to continue to focus on trying to capital. That's a priority as I said in my comments John talked about of course, we will continue to look at bolt on opportunities are.
Speaker Change: And what you'll come up with is about half of that comes from leverage capacity. They have for the 1.25 billion. The other half is really as our free cash flow exceeds growth exceeds our 5% target distribution that gives you about the other half of that 1.25.
Speaker Change: For us we're very fortunate it it's a bit of an add on or but continuing I probably will be.
Speaker Change: Continue to evaluate opportunities, but the bar is high we have significant organic growth and so there's not a need to do anything and then absent that of course will continue to focus on shareholder returns as we've done through and come out to be a trusted.
Speaker Change: We're in a great position to be able to you know primary objective is continue to focus on trying to capital. That's a priority as I said in my comments John talked about of course, we'll continue to look at bolt on opportunities for us we're very fortunate it it's a bit of an add on or a but continuing I probably will be.
Speaker Change: Repurchases and dividend increases.
Speaker Change: Thanks appreciate the color there and just following up.
Speaker Change: The first quarter.
Speaker Change: Guidance is adjusted for those weather.
Speaker Change: Continue to evaluate opportunities, but the bar is high we have significant organic growth and so there's not a need to do anything and then after that of course will continue to focus on shareholder returns as we've done through incremental.
Speaker Change: Impacts in January you know.
Speaker Change: What does that guidance assume beyond what has already occurred in the quarter and how do you expect the basin to recover them progressing in line. So we have left.
Speaker Change: Repurchases and dividend increases.
Speaker Change: Yeah. So I think for January the weather has been kind of bouncing around a little bit just from an overall temperature perspective, and wind also contributing to some operational challenges.
Speaker Change: Thanks appreciate the color there and just following up.
Speaker Change: Yes, the first quarter.
Speaker Change: Guidance is adjusted for those weather.
Speaker Change: Challenges as well.
Speaker Change: Generally speaking the first quarter tends to be a little bit more unpredictable from a weather perspective. So again, we've obviously seen the impact and I think the basin is order of magnitude is down about 10% Hess is down less than that.
Impacts in January you know.
Speaker Change: What does that guidance assume beyond what has already occurred in the quarter and how do you expect the basin to recover them.
Speaker Change: A couple of months, we have left.
Speaker Change: Yeah. So I think for January the weather has been kind of bouncing around a little bit just from an overall temperature perspective, and wind also contributing to some operational challenges.
Speaker Change: I'd say overall recovery has been strong we expect volumes to get back online, but we still have two more at least two more months of weather ahead of us. So we're just trying to be thoughtful.
Speaker Change: Challenges as well.
Speaker Change: Generally speaking the first quarter tends to be a little bit more unpredictable from a weather perspective. So again, we've obviously seen the impact and I think the basin is order of magnitude is down about 10% Hess is down less than that I would say overall recovery has been strong we expect.
Speaker Change: Maybe a little bit conservative on our approach to the to the first quarter, but just trying to manage expectations going going into first quarter. So so overall I think we feel like it's the our first quarter numbers are deliverable.
Speaker Change: And we're just kind of focused on supporting Hess as best we can as that as that volume recovers in the basin.
Speaker Change: Volumes to get back online, but we still have two more at least two more months of weather ahead of us. So we're just trying to be thoughtful.
Speaker Change: Well I think I just would add is you know if you look at our full year EBITDA guidance and then you take our first quarter guidance that really implies that on average our EBITDA Q2 through Q4 is going to be up 11% on average. So you know really significant growth I would expect that growth to be phased.
Speaker Change: Maybe a little bit conservative on our approach to the to the first quarter, but just trying to manage expectations going going into first quarter. So so overall I think we feel like it's the our first quarter numbers are deliverable.
Speaker Change: Jonathan described you'll volume grow throughout the rest of the year. So expect that EBITDA to continue to grow but certainly once we get past the weather and all the things that John just described it's only a significant step up and continue to grow through the rest of the year.
And we're just kind of focused on supporting Hess as best we can as that as that volume recovers in the basin.
Speaker Change: Well I think I just would add is you know if you look at our full.
Speaker Change: Full year EBITDA guidance, and then you take our first quarter guidance that really implies that on average right. EBITDA Q2 through Q4 is going to be up 11% on average so really significant growth I would expect that growth to be phased.
Speaker Change: Great. Thank you so much for the time that for me.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Noah Katz from JP Morgan Chase.
Speaker Change: As John has described you'll volume grow throughout the rest of the year. So expect that EBITDA to continue to grow but certainly once we get past the weather and all the things that John just described certainly a significant step up and continue to grow through the rest of the year.
Hey, Thanks for the question first it would be helpful. If you could provide a walk of expectations for EBITDA in costs throughout each quarter of 2025, how should we think about the business seasonally compared to 24. Thanks.
Speaker Change: Great. Thank you so much for the time that for me.
Speaker Change: Yeah, I think the way to think about this is generally the seasonality that we have particularly in North Dakota are let's say that'll let's start on the cost side are really you know Q1, typically a bit lower.
Speaker Change: Thank you one moment for our next question.
Noah Katz: Our next question comes from the line of Noah Katz from JP Morgan Chase.
Speaker Change: Hey, Thanks for the question.
Speaker Change: Then other quarters Q2, and Q3 are really the quarters, where we have the highest amount of activity and then what I would say that Q4 is it we've had different types of quarters.
Speaker Change: First it would be helpful. If you could provide a walk of expectations for EBITDA in costs throughout each quarter of 2025, how should we think about the business seasonally compared to 24. Thanks.
Speaker Change: The weather is good the team has really worked to optimize our credit to the team to really take advantage of getting worked out in Q4 a.
Speaker Change: Yeah, I think the way to think about this is generally the seasonality that we have particularly in North Dakota are let's say that'll it will start on the cost side really Q1, typically a bit lower.
Speaker Change: Before I get back into Q1, and really you know potential for severe winter weather. So that if the it's a bit milder we have had a year as we'll be able to do a bit more in Q4.
Speaker Change: Then other quarters Q2, and three are really the quarters, where we have the highest amount of activity and then what I'd say is Q4 is it.
Speaker Change: So that's always a kind.
Speaker Change: Kind of a bit of a variable also in Q4 as you saw this year allocation kind of finalized in Q4. So that's always provides a little bit of variability on the volume side expect I really just steady growth quarter.
Speaker Change: We've had different types of quarters.
Speaker Change: The weather is good the team has really worked to optimize our credit to the team to really take advantage of getting worked out in Q4.
Speaker Change: Quarter on quarter are ill.
Speaker Change: Obviously that will vary depending on our wells online and all of that type of thing but in general.
Speaker Change: Before you get back into Q1, it really you know potential for severe winter weather. So if it's a bit milder we have had a year as we'll be able to do a bit more in Q4.
Speaker Change: Steady growth throughout the year as we continue to bring more wells online and continue to see growth in an oil and then growth with that associated gas as well.
Speaker Change: So that's always kind.
Speaker Change: Kind of a bit of a variable also in Q4 as you saw this year allocation kind of finalized in Q4. So that's always provides a little bit of variability on the volume side expect I really just steady growth quarter.
Speaker Change: Thanks for that and then as a quick follow up just looking at the trend of around $100 million in repurchases every quarter do you think you could exceed this threshold in 2025 or should we expect for this to stay relatively consistent.
Speaker Change: Quarter on quarter ill.
Speaker Change: Ill, obviously that will vary depending on our wells online and all that type of thing but in general.
Speaker Change: Steady growth throughout the year as we continue to bring more wells online continue to see growth in oil and then growth with that associated gas as well.
Speaker Change: Sure Yeah, what I would say is look we are because that's what we've been doing it would expect multiple repurchases per year.
Speaker Change: As you saw in 2024 before that we've been doing about $100 million, but that's not a set in stone I would say about certainly I would say that we did do a $100 million already are at the beginning here of the quarter, but that was really think of that more of a Q4, just as we kind of got into that Q4 holidays and all of that we didn't want to kind of execute at right at year end.
Speaker Change: Thanks for that and then as a quick follow up just looking at the trend of around $100 million in repurchases every quarter do you think you could exceed this threshold in 2025 or should we expect for this to stay relatively consistent.
Speaker Change: Sure Yeah, what I would say is look we are because that's what we've been doing it would expect multiple repurchases per year.
Speaker Change: So that was more of a kind of a catch up for Q4, so that would kind of think of it that way and then the pace will set throughout the year, but certainly expect a multiple it'll be purchases for quarter similar to per year.
As you saw in 2024 before that we've been doing about $100 million, but that's not a set in stone I would say about certainly I would say that we did do $100 million already at the beginning here of the quarter, but that was really think of that more of a Q4, just as we kind of got into that Q4 holidays and all of that we didn't want to kind of execute at right at year end.
Speaker Change: Similar to what you if it's out of the past.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: So that was more of a kind of catch up for Q4, so that would kind of think of it that way and then the pace will set throughout the year, but certainly expect multiple it'll be purchases per quarter similar to per year.
Speaker Change: Similar to what you if it's out of the past.
Speaker Change: Thank you.
Speaker Change: Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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