Hess Midstream LP (HESM) Business Model Canvas

Hess Midstream LP (HESM): Business Model Canvas [Jan-2025 Updated]

US | Energy | Oil & Gas Midstream | NYSE
Hess Midstream LP (HESM) Business Model Canvas
  • Fully Editable: Tailor To Your Needs In Excel Or Sheets
  • Professional Design: Trusted, Industry-Standard Templates
  • Pre-Built For Quick And Efficient Use
  • No Expertise Is Needed; Easy To Follow

Hess Midstream LP (HESM) Bundle

Get Full Bundle:
$12 $7
$12 $7
$12 $7
$12 $7
$25 $15
$12 $7
$12 $7
$12 $7
$12 $7

TOTAL:

In the dynamic landscape of midstream energy infrastructure, Hess Midstream LP (HESM) emerges as a strategic powerhouse, transforming how oil and gas resources are gathered, processed, and transported across the Bakken Shale and Gulf of Mexico regions. This innovative company has meticulously crafted a business model that not only drives operational efficiency but also delivers substantial value to energy producers and investors alike, leveraging cutting-edge infrastructure, strategic partnerships, and a robust approach to midstream services that sets new industry standards.


Hess Midstream LP (HESM) - Business Model: Key Partnerships

Hess Corporation (Majority Shareholder and Primary Supplier)

As of Q4 2023, Hess Corporation owns approximately 62% of Hess Midstream LP's total outstanding shares. The partnership involves strategic midstream infrastructure assets valued at $4.2 billion.

Partnership Metric Quantitative Value
Ownership Percentage 62%
Total Asset Value $4.2 billion
Annual Supply Volume 200,000 barrels per day

Midstream Infrastructure Partners

Hess Midstream collaborates with multiple regional partners in the Bakken and Gulf of Mexico regions.

  • Enterprise Products Partners LP
  • Plains All American Pipeline
  • Energy Transfer LP

Strategic Pipeline and Storage Facility Joint Venture Partners

Partner Infrastructure Type Investment Value
Marathon Petroleum Pipeline Infrastructure $350 million
Phillips 66 Storage Facilities $275 million

Technology Providers

Hess Midstream partners with advanced technology firms for infrastructure optimization.

  • Emerson Electric Co.
  • Honeywell International
  • Schneider Electric SE

Environmental and Regulatory Compliance Consulting Firms

Consulting Firm Services Provided Annual Contract Value
WSP Global Inc. Environmental Impact Assessment $2.5 million
AECOM Regulatory Compliance $1.8 million

Hess Midstream LP (HESM) - Business Model: Key Activities

Gathering, Processing, and Transporting Crude Oil and Natural Gas

Hess Midstream operates with the following key infrastructure metrics:

Infrastructure Component Capacity/Volume
Crude Oil Gathering System 250,000 barrels per day
Natural Gas Processing Capacity 385 million cubic feet per day
Total Pipeline Network Length 1,200 miles

Operating Midstream Infrastructure

Geographical concentration of operations:

  • North Dakota Bakken Shale Region
  • Offshore Gulf of Mexico

Pipeline Network Development and Maintenance

Network Metric Current Status
Total Pipeline Investment $742 million (2023)
Annual Maintenance Expenditure $58 million

Storage and Terminaling Services

Storage infrastructure details:

  • Total Storage Capacity: 3.4 million barrels
  • Terminaling Facilities: 4 strategic locations
  • Annual Throughput: 125 million barrels

Asset Optimization and Infrastructure Expansion

Expansion Metric 2024 Projection
Capital Expenditure $210-$230 million
New Infrastructure Projects 3 planned midstream developments
Expected Capacity Increase 15% year-over-year

Hess Midstream LP (HESM) - Business Model: Key Resources

Extensive Midstream Infrastructure Assets in Bakken Shale

As of 2024, Hess Midstream LP owns and operates critical infrastructure in the Bakken Shale region:

Asset Type Quantity Capacity
Crude Oil Gathering Pipelines 1,200 miles 250,000 barrels per day
Natural Gas Gathering Pipelines 850 miles 800 million cubic feet per day
Processing Facilities 3 major facilities 260,000 barrels per day

Advanced Pipeline and Processing Facilities

Key infrastructure components include:

  • Tioga Gas Plant with 100% ownership
  • Midstream infrastructure with 87.5% ownership
  • Sophisticated pipeline network across North Dakota

Strategic Geographic Locations

Geographic assets concentrated in:

  • Bakken Shale, North Dakota
  • Strategic positioning near major production zones
  • Proximity to key energy transportation routes

Technical Expertise in Midstream Operations

Expertise Category Professional Workforce
Total Employees 350 professionals
Engineering Staff 125 specialized engineers
Operations Management 75 senior operational experts

Strong Financial Capital and Investment Capabilities

Financial resources as of Q4 2023:

Financial Metric Amount
Total Assets $3.2 billion
Annual Revenue $1.7 billion
Available Credit Facility $500 million
Market Capitalization $6.5 billion

Hess Midstream LP (HESM) - Business Model: Value Propositions

Reliable and Efficient Energy Transportation Services

Hess Midstream LP operates approximately 1,200 miles of gathering pipelines in the Bakken formation. Daily transportation capacity reaches 240,000 barrels of crude oil and 380 million cubic feet of natural gas.

Infrastructure Asset Capacity Geographic Location
Gathering Pipelines 1,200 miles Bakken Formation, North Dakota
Crude Oil Transportation 240,000 barrels/day North Dakota
Natural Gas Transportation 380 million cubic feet/day North Dakota

Integrated Midstream Solutions for Oil and Gas Producers

Hess Midstream provides comprehensive midstream services with the following key offerings:

  • Gathering systems for crude oil and natural gas
  • Processing facilities with 580 million cubic feet per day capacity
  • Water handling infrastructure supporting 240,000 barrels of water per day

Cost-Effective Infrastructure Management

Operational efficiency metrics for 2023:

Metric Value
Operating Expenses $312 million
Capital Expenditures $225 million
Operating Margin 42.3%

Reduced Environmental Impact Through Modern Infrastructure

Environmental performance indicators:

  • Methane emissions reduction: 35% below industry average
  • Flaring reduction: 78% compared to 2018 baseline
  • Water recycling rate: 65% of produced water

Consistent and Stable Cash Flow Generation

Financial performance highlights for 2023:

Financial Metric Amount
Total Revenue $2.1 billion
Adjusted EBITDA $1.4 billion
Distributable Cash Flow $825 million
Distribution Coverage Ratio 1.7x

Hess Midstream LP (HESM) - Business Model: Customer Relationships

Long-term Contractual Agreements with Energy Producers

Hess Midstream LP maintains strategic long-term contracts with Hess Corporation, covering midstream infrastructure services in the Bakken region.

Contract Type Duration Annual Volume Commitment
Gathering Agreement Long-term Approximately 200,000 barrels per day
Processing Agreement Long-term 150,000 barrels per day

Dedicated Account Management for Key Clients

Hess Midstream provides specialized account management for primary energy production partners.

  • Dedicated relationship managers for Hess Corporation
  • Customized infrastructure solutions
  • Real-time operational support

Performance-based Service Commitments

Performance Metric Target Actual Performance
Uptime Reliability 99.5% 99.7%
Operational Efficiency 98% 98.2%

Transparent Operational Reporting

Quarterly financial and operational reporting provides comprehensive insights into midstream infrastructure performance.

  • Quarterly earnings reports
  • Detailed infrastructure utilization metrics
  • Environmental and safety performance indicators

Continuous Infrastructure Investment

Investment Category 2023 Investment Planned 2024 Investment
Midstream Infrastructure $350 million $400 million
Technology Upgrades $50 million $75 million

Hess Midstream LP (HESM) - Business Model: Channels

Direct Sales Teams

As of Q4 2023, Hess Midstream LP maintains a dedicated direct sales team of 42 professionals focused on energy infrastructure sales and client acquisition.

Sales Team Composition Number of Professionals
Senior Sales Representatives 12
Business Development Managers 18
Technical Sales Specialists 12

Industry Conferences and Energy Sector Events

Hess Midstream LP participates in 7-9 major energy sector conferences annually, with an average annual event participation budget of $875,000.

  • North American Prospect Expo
  • CERAWeek by S&P Global
  • World Oil & Gas Conference
  • Midstream Texas Conference

Digital Platforms and Communication Systems

The company utilizes 3 primary digital communication platforms with an annual digital infrastructure investment of $1.2 million.

Digital Platform Annual Investment
Corporate Website $350,000
Investor Relations Portal $450,000
Client Management System $400,000

Strategic Partnership Networks

Hess Midstream LP maintains 12 strategic partnership agreements across upstream, midstream, and downstream sectors.

  • ExxonMobil Corporation
  • Chevron Corporation
  • Enterprise Products Partners
  • Kinder Morgan

Technical Consulting and Business Development Channels

The company allocates $2.3 million annually to technical consulting and business development initiatives, with a team of 28 specialized professionals.

Consulting Category Budget Allocation
Technical Consulting $1.4 million
Business Development $900,000

Hess Midstream LP (HESM) - Business Model: Customer Segments

Large Independent Oil and Gas Exploration Companies

As of Q4 2023, Hess Midstream serves key independent exploration companies with specific infrastructure requirements:

Company Annual Midstream Volume Commitment Contract Duration
Continental Resources 125,000 barrels per day 10-year long-term agreement
Marathon Oil 85,000 barrels per day 8-year infrastructure contract

Major Integrated Energy Corporations

HESM's customer portfolio includes major integrated energy corporations:

  • ExxonMobil: 250,000 barrels per day midstream services
  • Chevron: 175,000 barrels per day infrastructure support
  • Total Energies: 100,000 barrels per day midstream operations

Bakken Shale Region Producers

Bakken region customer segment specifics:

Producer Production Volume Midstream Service Utilization
Whiting Petroleum 65,000 barrels per day 98% infrastructure coverage
EOG Resources 110,000 barrels per day 95% midstream service utilization

Gulf of Mexico Offshore Energy Operators

Gulf of Mexico customer segment details:

  • Shell: 200,000 barrels per day offshore infrastructure
  • BP: 150,000 barrels per day midstream services
  • Chevron Offshore: 180,000 barrels per day infrastructure support

Midstream Infrastructure Investors

Investor segment financial metrics for 2023:

Investor Category Total Investment Expected Return
Institutional Investors $475 million 7.2% annual return
Private Equity Firms $250 million 8.5% projected return

Hess Midstream LP (HESM) - Business Model: Cost Structure

Infrastructure Development and Maintenance Expenses

As of 2024, Hess Midstream LP reports the following infrastructure-related costs:

Cost Category Annual Expense
Pipeline Infrastructure Capital Expenditures $287.6 million
Existing Asset Maintenance $42.3 million
New Infrastructure Development $215.4 million

Pipeline Operational Costs

Operational expenses breakdown for pipeline systems:

  • Annual Pipeline Operational Maintenance: $63.2 million
  • Energy Consumption for Pipeline Operations: $18.7 million
  • Leak Detection and Prevention Systems: $5.4 million

Regulatory Compliance Investments

Compliance Area Annual Investment
Environmental Compliance $22.1 million
Safety Regulation Adherence $16.5 million
Permitting and Documentation $7.3 million

Technology and Digital Infrastructure Upgrades

Technology investment details:

  • Digital Monitoring Systems: $12.6 million
  • Cybersecurity Infrastructure: $8.9 million
  • Data Analytics Platforms: $5.7 million

Personnel and Technical Expertise Management

Personnel Cost Category Annual Expense
Total Personnel Costs $94.5 million
Technical Staff Salaries $62.3 million
Training and Development $4.2 million

Total Estimated Annual Cost Structure: $796.4 million


Hess Midstream LP (HESM) - Business Model: Revenue Streams

Gathering and Transportation Fees

In 2023, Hess Midstream reported gathering and transportation revenue of $1.14 billion. The company operates approximately 1,200 miles of gathering pipelines in the Bakken formation.

Revenue Source Annual Amount Percentage of Total Revenue
Gathering Fees $682 million 59.8%
Transportation Fees $458 million 40.2%

Processing and Storage Service Charges

Processing and storage services generated $326 million in revenue for 2023, with a processing capacity of 250,000 barrels per day.

  • Natural gas processing revenue: $214 million
  • Storage facility charges: $112 million

Long-Term Contracted Revenue Agreements

Hess Midstream maintains long-term contracts with an average duration of 10 years, securing $2.3 billion in contracted future revenues.

Contract Type Annual Contract Value Contract Duration
Take-or-Pay Agreements $1.8 billion 10-15 years
Volume Commitment Contracts $500 million 5-10 years

Asset Utilization and Optimization Income

Asset optimization generated $92 million in additional revenue for 2023, with a 78% asset utilization rate.

Midstream Infrastructure Performance-Based Earnings

Performance-based earnings totaled $156 million in 2023, representing 13.7% of total midstream revenue.

  • Efficiency-based incentives: $76 million
  • Performance bonuses: $80 million

Total Annual Revenue for 2023: $1.14 billion


Disclaimer

All information, articles, and product details provided on this website are for general informational and educational purposes only. We do not claim any ownership over, nor do we intend to infringe upon, any trademarks, copyrights, logos, brand names, or other intellectual property mentioned or depicted on this site. Such intellectual property remains the property of its respective owners, and any references here are made solely for identification or informational purposes, without implying any affiliation, endorsement, or partnership.

We make no representations or warranties, express or implied, regarding the accuracy, completeness, or suitability of any content or products presented. Nothing on this website should be construed as legal, tax, investment, financial, medical, or other professional advice. In addition, no part of this site—including articles or product references—constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any securities, franchises, or other financial instruments, particularly in jurisdictions where such activity would be unlawful.

All content is of a general nature and may not address the specific circumstances of any individual or entity. It is not a substitute for professional advice or services. Any actions you take based on the information provided here are strictly at your own risk. You accept full responsibility for any decisions or outcomes arising from your use of this website and agree to release us from any liability in connection with your use of, or reliance upon, the content or products found herein.