Chevron to divest its ownership interests in Hess Midstream and DJ Basin crude midstream assets

Chevron Corporation announced that several of its subsidiaries have entered into a series of definitive agreements with Hess Midstream LP (NYSE: HESM) to restructure its Bakken midstream contracts and establish new agreements for midstream services in the DJ Basin. The revised agreements extend the Bakken contracts and are expected to reduce Chevron’s unit midstream costs in the Bakken by approximately 50%, improving future earnings and return on capital employed. In exchange for the enhanced long-term commercial framework and $200 million in cash consideration, Chevron will transfer its ownership interests and general partner position in Hess Midstream, along with its DJ Basin crude oil midstream assets, to Hess Midstream.

As part of the transaction, Chevron expects to fully deconsolidate Hess Midstream, including approximately $3.7 billion in Hess Midstream debt. The company anticipates that the transaction will increase its return on capital employed by 0.5 percentage points on an absolute basis and generate long-term economic value through lower costs and improved earnings. Upon closing, Chevron expects to record a one-time after-tax loss of approximately $3 billion to $4 billion,¹ as it cannot recognize future cost savings from the Bakken midstream contracts as an asset.

“This transaction resets the commercial framework between our upstream and midstream assets in the Bakken and DJ Basins,” said Andy Walz, Chevron’s President of Downstream, Midstream and Chemicals. “It lowers our Bakken cost structure while positioning Hess Midstream to advance as an independent company.” Chevron expects to sustain Bakken production through ongoing technology deployment and operational improvements drawn from its global shale and tight portfolio.

Approvals and Timing

The transaction has received approval from the Conflicts Committee of the Board of Directors of Hess Midstream’s general partner, which consists entirely of independent directors, following consultation with independent legal and financial advisors. The deal remains subject to customary closing conditions and regulatory approvals and is expected to be completed by the end of 2026.

¹ The expected loss is classified as a special item.

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