Hess Midstream Increased The Dividend In January, 2020

The increased dividend is adequately covered.
A key leverage ratio is projected remain near 3.
Hess has a bankable discovery with the Exxon Mobil partnership.
Hess has considerable credit available to fund the Exxon Mobil partnership financial needs.
Hess Midstream will benefit from the growth in store for the Bakken production.
Hess Midstream (HESM) should be able to maintain that increased dividend because it has one of the lowest leverages in the midstream industry. This is a midstream with one customer, Hess (HES). That customer has announced a series of major discoveries in a partnership with Exxon Mobil (XOM) off the coast of Northeastern South America. Those very profitable discoveries should be extremely "bankable" even in the current low oil price environment. That means that Hess Midstream (HESM) has a decent future servicing the midstream needs of the Bakken leases of Hess.
Most lenders know a high quality discovery when they see one. The South American discovery very much fits the definition of "world class". Each discovery well drilled appears to be steadily lowering the per BOE costs of the project. These types of large projects generally do not progress unless low operating costs are clearly evident to everyone involved because they are very expensive. No one involved wants to lose money during an extended period of low oil (and possibly natural gas) pricing.
All of this is very good news for Hess Midstream customers. In the last fiscal year, Hess had done what it could to maximize the cash flow from the Bakken production while making sure that the company cash position was strong and there were adequate bank lines "just in case".
Sure enough, Hess just announced an additional $1 billion bank lending agreement to go with the substantial $3.5 billion undrawn bank line and a strong cash position in excess of $1 billion. The partnership with Exxon Mobil had already ordered the necessary equipment for offshore production of various... Read more