Is HESM a Buy? What to Consider in 2026

Last updated July 2026

Short answer

The bull case for Hess Midstream LP owns and (HESM) rests on Fee-based, contracted cash flow: Nearly all revenue comes from long-term, fixed-fee contracts with minimum-volume commitments, which smooths cash flow across commodity cycles. Revenue (TTM) is ~$1.55B. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: HESM carries significant concentration risk: growth depends almost entirely on drilling activity in a single basin (the Bakken) served by a single anchor customer (now Chevron). Whether HESM is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.

Hess Midstream LP owns and operates midstream infrastructure in the Williston Basin (Bakken and Three Forks shale plays) in North Dakota, running three segments: gathering (oil, gas, and produced water pipelines), processing and storage (natural gas processing and NGL fractionation), and terminaling and export (crude and NGL loading and transport). It earns essentially all revenue from fixed, fee-based, long-term contracts with minimum-volume commitments, historically with Hess Corporation and now with Chevron following Chevron's July 2026 completion of its Hess acquisition. This structure insulates cash flow from short-term commodity-price swings, since HESM is paid for handling volumes rather than for the value of the barrels. The investment picture is that of a yield-and-return-of-capital vehicle rather than a growth stock. Management guides to at least 5% annual distribution growth through 2028, has raised the payout for eight consecutive years, and returns excess free cash flow through buybacks (including recurring accretive repurchases from its sponsor). The trade-off is concentration: growth depends almost entirely on drilling intensity in a single basin served by a single anchor customer, so a decision like Chevron trimming Bakken rigs directly pressures volumes and guidance. Unlike diversified peers, HESM has little exposure to energy-export or energy-transition tailwinds.

What's the case for buying HESM?

1. Fee-based, contracted cash flow

Nearly all revenue comes from long-term, fixed-fee contracts with minimum-volume commitments, which smooths cash flow across commodity cycles. This underpins the distribution and gives management visibility into multi-year free cash flow. It is the core reason the units trade as an income vehicle.

2. Return of capital

HESM targets at least 5% annual distribution growth through 2028 and has raised its payout for eight straight years, reaching roughly $0.78 per Class A share quarterly in Q1 2026. It also returns excess free cash flow via buybacks, including recurring accretive repurchases of Class A shares and Class B units from its sponsor. Guidance points to roughly $1 billion of excess free cash flow available for returns.

3. Low capital intensity and free cash flow harvest

With 2026 capital expenditures guided to only about $105 million against adjusted EBITDA of roughly $1.25 billion, the business generates substantial free cash flow. Adjusted free cash flow guidance sits in the high hundreds of millions to near $960 million for 2026. This supports both the growing distribution and continued buybacks.

4. Chevron sponsorship transition

Chevron completed its acquisition of Hess in July 2026, replacing Hess Corporation as HESM's anchor customer and sponsor (Global Infrastructure Partners fully exited earlier in 2026). A larger, well-capitalized parent could support Bakken development, though it also concentrates counterparty exposure in one major. Some analysts view HESM as a potential future consolidation target.

What are the risks to HESM?

HESM carries significant concentration risk: growth depends almost entirely on drilling activity in a single basin (the Bakken) served by a single anchor customer (now Chevron). Chevron's decision to cut Bakken rigs from three to two has already weighed on volume expectations and guidance. As a limited partnership it issues a Schedule K-1 and has tax and structural considerations that differ from a standard corporation. It also lacks the diversified export and energy-transition exposure of larger midstream peers, and rising leverage or a distribution policy change would directly affect the income thesis. A Morgan Stanley downgrade and sponsor-transition concerns have added to sentiment risk.

How is HESM valued? (as of July 2026)

Price

$39.81

Market cap

$8.23B

P/E (TTM)

13.78

Forward P/E

13.19

Price / book

9.86

Beta

0.50

52-week range

$31.63 to $44.14

Snapshot for HESM as of July 2026, sourced from Yahoo Finance and may be delayed. Valuation figures move with price and earnings; verify the current numbers with your broker before deciding.

Revenue (TTM): ~$1.55B
Q1 2026 revenue: ~$390M
2026 adj. EBITDA guidance: ~$1.225B-$1.275B
2026 net income guidance: ~$650M-$700M
Market cap: ~$7.8B
Dividend yield: ~8%
Trailing P/E: ~13x
EV / EBITDA: ~9.4x

HESM trades like an income-oriented midstream partnership, with a high single-digit distribution yield and mid-teens P/E supported by contracted, fee-based cash flow. Enterprise value sits near $11.6 billion, reflecting partnership leverage on top of the roughly $7.8 billion equity value. Valuation multiples are broadly in line with fee-based midstream peers, with the yield doing much of the work in the total-return case.

How do you decide if HESM is a buy?

Rather than asking whether HESM is a buy in the abstract, it tends to help to answer four questions:

Thesis: do you believe the case above, and is it still true today?
Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
Overlap: check whether you already hold HESM indirectly through an index or sector ETF before adding more.

For the full picture, see the HESM stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about HESM against your real portfolio and see your actual exposure before deciding.

The bottom line on HESM

The bottom line: Hess Midstream LP owns and's story right now is Fee-based, contracted cash flow, with revenue (ttm) at ~$1.55B. If you believe that narrative continues, the call is about sizing HESM sensibly and checking overlap with what you own; if you doubt it (the risk: hESM carries significant concentration risk: growth depends almost entirely on drilling activity in a single basin (the Bakken) served by a single anchor customer (now Chevron).), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.

More on HESM

HESM stock guide (what the company does, ETFs that hold it, similar stocks, and the themes it fits)
HESM stock forecast (the drivers and risks shaping the outlook)
Does HESM pay a dividend?

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FAQ

Is HESM a good stock to buy right now?

The case for Hess Midstream LP owns and right now is Fee-based, contracted cash flow, with revenue (ttm) at ~$1.55B. If you believe that thesis holds, HESM is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is hESM carries significant concentration risk: growth depends almost entirely on drilling activity in a single basin (the Bakken) served by a single anchor customer (now Chevron). So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.

What does Hess Midstream LP owns and do?

Hess Midstream LP owns and operates midstream infrastructure in the Williston Basin (Bakken and Three Forks shale plays) in North Dakota, running three segments: gathering (oil, ga

What are the main risks of HESM?

What does Hess Midstream (HESM) do?

It owns and operates midstream infrastructure in North Dakota's Bakken shale, gathering, processing, storing, and transporting crude oil, natural gas, NGLs, and produced water. It earns fee-based revenue under long-term contracts rather than by taking direct commodity-price exposure.

Is HESM a stock or a partnership?

HESM is a limited partnership, so holders own units rather than shares and typically receive a Schedule K-1 for tax purposes. Its structure and tax treatment differ from a standard corporation, which is worth understanding before investing. Walnut is not an investment adviser.

Who is HESM's main customer?

Historically Hess Corporation, and now Chevron, which completed its acquisition of Hess in July 2026. Chevron is both the anchor customer whose Bakken production drives HESM's volumes and a major holder of the partnership.

What is HESM's dividend yield?

As of mid-2026 the distribution yield was roughly 8%, with a quarterly Class A distribution near $0.78 per unit. Management targets at least 5% annual distribution growth through 2028 and has raised the payout for eight consecutive years.

Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell HESM; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.