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- From Buildout to Harvest: The Bakken Income Engine Entering Its Prime
From Buildout to Harvest: The Bakken Income Engine Entering Its Prime
After years of expansion, this Bakken midstream operator is shifting into cash harvest mode. Contract-backed volumes and disciplined capital returns position it to pay through the cycle.
Noah Zelvis
February 12, 2026
Energy cycles have a way of humbling the overextended. When commodity prices swing, the weakest models are exposed, and income promises start to look fragile.
This operator has already done the heavy lifting. The infrastructure is built, the contracts are in place, and the story is shifting from spending capital to harvesting cash. Are you ready to reap what it sows?
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Energy downturns expose the tourists. When oil wobbles, weak operators start scrambling, balance sheets tighten, and payouts suddenly look negotiable.
The businesses that thrive are the ones that locked in their economics long before the headlines turned negative.
Hess Midstream LP (NYSE: HESM) is built for exactly that kind of environment. Long-term, fee-based contracts.
Visible volumes. Disciplined capital returns. This is not a speculative swing on crude prices. It is a cash flow machine in the Bakken, engineered to keep paying you quarter after quarter.
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A contracted cash flow machine in the Bakken
HESM is not an exploration story. It is an infrastructure story.
The partnership owns and operates gathering systems, processing plants, and export infrastructure that move crude oil, natural gas, and water across the Bakken.
Crucially, most of that volume is backed by long-term, fee-based agreements with minimum commitments. Contracts, not daily oil prices, define the economics.
Its anchor customer, Hess Corporation, has dedicated substantial acreage to the system. That creates alignment, visibility, and scale.
When wells are drilled, volumes flow through Hess Midstream’s assets. When production holds steady, cash flow holds steady.
This is infrastructure with embedded demand.
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Built for through-cycle stability
Because the majority of revenue is fee-based, cash flow is far less volatile than that of upstream producers. Costs are largely fixed, which means incremental volumes drop through at attractive margins.
That operating leverage, paired with disciplined capital allocation, has translated into consistent distributable cash flow.
Management has avoided empire-building. Expansion projects are tied to visible production needs. Leverage has remained controlled. Free cash flow increasingly supports both growth investments and capital returns.
The result is a midstream business that behaves more like a utility than a commodity trade.
Action: If you want exposure to the Bakken without speculating on crude prices, Hess Midstream deserves serious consideration. |
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The build phase ends. The cash flow phase begins.
This is the quarter where you can almost hear the cash register ringing.
Hess Midstream put up $168 million in Q4 2025 net income and $309 million in adjusted EBITDA. Reliable. On script. But the real story is what happened after the bills were paid.
Capital spending dropped 44 percent year over year as the big compression buildout wrapped up.
The expensive part of the growth cycle is largely over. The assets are in the ground. The capacity is online.
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Earning from assets
For the full year, adjusted EBITDA hit $1.24 billion, and free cash flow surged to $779 million. That is not treading water. That is a platform starting to flex its scale.
Yes, winter weather nudged volumes lower in the fourth quarter. That is a season, not a thesis. On a full-year basis, throughput was higher across key systems.
The setup in 2026 is what matters. Lower capital intensity. Rising free cash flow. Manageable leverage around 3.1 times EBITDA.
This is where a midstream story stops being about construction updates and starts being about compounding income.
A handsome yield with a committed growth streak
This is where HESM starts to separate itself.
The quarterly distribution now stands at 76 cents per share, yielding 8.42%. The broader energy sector yields closer to 4.24%. That’s not a small gap. That’s double.
Hess Midstream has increased its distribution for nine consecutive years. That kind of streak in a commodity-linked industry tells you something about the business's structure.
The contracts work. The cash flow holds up. Management is confident enough to keep raising the bar.
Consistency counts
With capital spending rolling off and free cash flow climbing, coverage should only get stronger. The growth phase required investment.
The next phase should require discipline. So far, management has shown both.
This is a high yield. But it is also yielding well.
Action: If you are building an income portfolio and want a yield that is supported by visible contracts rather than hope, Hess deserves a close look. |
Navigating concentration and basin risk
No midstream story is bulletproof.
Hess is heavily tied to a single basin and a single primary customer. A meaningful portion of its volumes is linked to Hess Corporation.
If drilling activity in the Bakken slows materially or capital allocation shifts elsewhere, volume growth could stall.
Considering the bear case
Leverage at roughly 3 times EBITDA is manageable, but it is still leverage. In a prolonged downturn, distribution growth would likely pause before the balance sheet is stretched.
This is a concentrated, basin-focused midstream operator. If you want diversified, multi-basin exposure, this is not it.
Built to pay you through the cycle
Hess Midstream is not trying to be the biggest name in midstream. It is trying to be one of the most dependable.
The infrastructure is built. The contracts are in place. Capital spending is falling. Free cash flow is rising. And the distribution has increased for nine straight years, while the current yield sits above 8%
That combination is rare. Yes, it is tied to the Bakken. Yes, it carries leverage, as most midstream operators do.
But this is a fee-based system with visible volumes and an anchor customer that continues to develop the acreage feeding it.
Income strength backed by contracts, not hope
If you’re willing to accept basin concentration in exchange for income strength, Hess Midstream offers something powerful: a high yield that is backed by real cash flow, not optimism.
That’s all for today’s edition of the Dividend Brief.
Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!
—Noah Zelvis
DividendBrief.com