BAKU, Azerbaijan, October 7. Chevron Corporation has agreed to transfer its ownership interests and general partner position in Hess Midstream LP, along with its crude oil midstream assets in the DJ Basin, to Hess Midstream as part of a restructuring of their existing commercial arrangements.
The company said that under a series of definitive agreements, Chevron and Hess Midstream will restructure the company’s Bakken midstream contracts and establish new agreements covering DJ Basin midstream activities.
The revised Bakken agreements will extend the existing contracts and are expected to reduce Chevron’s Bakken unit midstream costs by approximately 50%, according to Chevron.
In exchange for the new long-term commercial framework and $200 million in cash consideration, Chevron will transfer its Hess Midstream ownership interests, its general partner position and its DJ Basin crude oil midstream assets to Hess Midstream.
As a result of the transaction, Chevron expects to fully deconsolidate Hess Midstream, including approximately $3.7 billion of Hess Midstream debt.
Chevron expects the deal to increase its return on capital employed by 0.5 percentage points on an absolute basis, while generating long-term economic value through lower costs and improved earnings.
However, Chevron expects to record a one-time after-tax loss of approximately $3 billion–$4 billion when the transaction closes. The company said this reflects its inability to recognize future savings from lower Bakken midstream costs as an asset.
“This transaction resets the commercial framework between our upstream and midstream assets in the Bakken and DJ Basins,” Andy Walz, Chevron’s President of Downstream, Midstream and Chemicals, said.
He added that the agreement would lower Chevron’s Bakken cost structure while positioning Hess Midstream to advance as an independent company.
Chevron said it expects to maintain Bakken production through continued deployment of technology and operational improvements across its shale and tight-oil portfolio.
The transaction has been approved by the Conflicts Committee of the board of directors of Hess Midstream’s general partner, which is composed entirely of independent directors. The deal remains subject to customary closing conditions and regulatory approvals and is expected to close by the end of 2026.
BofA Securities is serving as financial advisor to Chevron, while Latham & Watkins LLP is acting as its legal advisor. Evercore is advising the Conflicts Committee, with Gibson, Dunn & Crutcher LLP serving as its legal counsel.
