Hess Midstream vs Murphy USA
Hess Midstream collects, processes, and transports crude oil, natural gas, and water in the Bakken shale with stable fee-based contracts anchored by Hess Corporation; Murphy USA operates high-volume fuel stations and convenience stores at Walmart locations and freestanding sites across the Sun Belt. Hess Midstream vs Murphy USA pairs a midstream MLP with predictable cash flows and a high distribution yield against a high-velocity fuel retailer that generates strong returns on capital through low-cost, high-throughput fuel sales and growing convenience store economics. Both offer income-oriented investors attractive cash generation but through very different infrastructure and retail models. Readers'll compare fee contract quality, distribution growth rates, capital spending requirements, leverage, and the long-term competitive dynamics shaping each company's future.
Hess Midstream collects, processes, and transports crude oil, natural gas, and water in the Bakken shale with stable fee-based contracts anchored by Hess Corporation; Murphy USA operates high-volume f...
Investment Analysis
Hess Midstream
HESM
Pros
- Hess Midstream reported strong and growing net income with Q2 2025 income increasing to $179.7 million, driven by volume growth across gas processing, oil terminaling, and water gathering segments.
- The company increased its quarterly cash distribution consistently, with a 5% annual distribution growth guidance through 2027, supported by strong adjusted free cash flow.
- Chevron owns a significant 37.8% indirect stake following the Hess acquisition, providing strategic backing and stability to Hess Midstream’s operations and growth prospects.
Considerations
- Growth plans face headwinds due to Chevron's reduction of Bakken rig activity, impacting future throughput volumes and prompting some analyst downgrades.
- Revenue expectations for 2025 have been adjusted downward by around 2%, reflecting market and operational uncertainties in key shale regions.
- Despite strong cash flow, capital expenditures remain substantial to support compression and pipeline infrastructure expansion, involving execution risks and cost pressures.
Murphy USA
MUSA
Pros
- Murphy USA benefits from strong downstream retail fuel demand and a broad convenience store network with strategic presence in growing U.S. markets.
- Its focus on convenience retail and fuel operations provides diversified revenue streams, helping it navigate fuel price volatility and economic cycles effectively.
- The company has demonstrated consistent profitability and positive cash flow generation, supporting its ability to sustain dividends and reinvest in growth initiatives.
Considerations
- Murphy USA's profitability is closely tied to fuel price fluctuations and refining margins, exposing it to commodity price risks and regulatory changes.
- As a fuel retailer, the company faces increasing competition from alternative energy retailers and evolving consumer preferences towards electric vehicles.
- Economic downturns and shifts in transportation patterns can negatively impact fuel demand and in-store sales, potentially reducing revenue and cash flow.
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Which Baskets Do They Appear In?
OPEC+ Opens The Taps: Midstream's Moment
OPEC+ has decided to maintain its policy of gradually increasing oil production to meet rising global demand. This creates an investment opportunity in companies that provide the essential midstream services, such as transportation and storage, which will see increased business from the higher oil supply.
Published: July 25, 2025
Explore BasketNatural Gas Drilling Revival Play
A carefully selected group of stocks poised to benefit from the recent upturn in U.S. natural gas drilling activity. Our professional analysts have identified companies across the entire natural gas value chain that could see improved performance as drilling rebounds for the first time in twelve weeks.
Published: July 20, 2025
Explore BasketWhich Baskets Do They Appear In?
OPEC+ Opens The Taps: Midstream's Moment
OPEC+ has decided to maintain its policy of gradually increasing oil production to meet rising global demand. This creates an investment opportunity in companies that provide the essential midstream services, such as transportation and storage, which will see increased business from the higher oil supply.
Published: July 25, 2025
Explore BasketNatural Gas Drilling Revival Play
A carefully selected group of stocks poised to benefit from the recent upturn in U.S. natural gas drilling activity. Our professional analysts have identified companies across the entire natural gas value chain that could see improved performance as drilling rebounds for the first time in twelve weeks.
Published: July 20, 2025
Explore BasketBuy HESM or MUSA in Nemo
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