Chevron to Divest Hess Midstream and DJ Basin Assets in Bakken Contract Restructuring

Business Wire··US·Read original
3▲2 ▼0Impact / 5
Summary · why it matters

Chevron Corporation announced that several of its subsidiaries have entered into definitive agreements with Hess Midstream LP to restructure its Bakken midstream contracts and establish new DJ Basin midstream contracts. Under the deal, Chevron will transfer to Hess Midstream its ownership interests and general partner position in Hess Midstream, as well as its DJ Basin crude oil midstream assets, in exchange for the improved long-term commercial framework and $200 million in cash consideration. The revised agreements extend the Bakken contracts and are expected to reduce Chevron's Bakken unit midstream costs by approximately 50%, enhancing future earnings and return on capital employed. Chevron expects to fully deconsolidate Hess Midstream, including approximately $3.7 billion of Hess Midstream's debt, and expects the transaction to be accretive to return on capital employed by 0.5% on an absolute basis, while recognizing a one-time after-tax loss estimated at approximately $3 to $4 billion at closing. Andy Walz, Chevron's President of Downstream, Midstream and Chemicals, said the transaction resets the commercial framework between the company's upstream and midstream assets in the Bakken and DJ Basins, lowers its Bakken cost structure and positions Hess Midstream to advance as an independent company. The transaction has been approved by the Conflicts Committee of the Board of Directors of the general partner of Hess Midstream and is expected to close by year-end 2026, subject to customary closing conditions and regulatory approvals.

Impact on assets 2

Energy▲ · 2 stocks
Chevron Corp
CVX
▲ PositiveCapitalrelevance

Chevron restructures Bakken midstream contracts, cutting unit midstream costs ~50% and boosting ROCE, though it takes a $3-4B one-time loss and deconsolidates $3.7B of Hess Midstream debt.

Hess Midstream Partners LP
HESM
▲ PositiveCapitalrelevance

Hess Midstream gains Chevron's ownership interests, GP position, and DJ Basin crude midstream assets plus $200M cash, and becomes an independent company with extended Bakken contracts.

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