Chevron to divest Hess Midstream interests and DJ Basin assets in exchange for $200 million

Chevron Corporation (CVX) announced on Monday that several of its subsidiaries entered into definitive agreements with Hess Midstream LP (HESM) to divest its ownership interests and general partner position in Hess Midstream alongside its DJ Basin crude oil midstream assets.

Under the terms of the transaction, Chevron will receive $200 million in cash consideration and establish extended and improved Bakken midstream commercial terms alongside new DJ Basin midstream contracts.

The revised agreements are expected to reduce Chevron's Bakken unit midstream costs by approximately 50%. Chevron said in a filing that the transaction is expected to be accretive to return on capital employed by 0.5% on an absolute basis.

Upon closing, Chevron expects to fully deconsolidate Hess Midstream and remove approximately $3.7 billion of Hess Midstream's debt from its books. At closing, the company expects to recognize a one-time after-tax loss estimated at approximately $3 to $4 billion, which it plans to treat as a special item, because it cannot recognize future Bakken midstream cost savings 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."

The transaction has received approval from the Conflicts Committee of the Board of Directors of the general partner of Hess Midstream, which consists entirely of independent directors. The deal remains subject to customary closing conditions and regulatory approvals, and it is expected to close by year-end 2026. BofA Securities acted as financial advisor and Latham & Watkins LLP acted as legal advisor to Chevron.