Chevron to sell Hess Midstream and DJ Basin assets in restructuring deal

Chevron (CVX) announced after the market closed on Tuesday that it has reached an agreement to sell its ownership interests in Hess Midstream (HESM) and its DJ Basin crude oil midstream assets. The move is part of a broader restructuring of its Bakken midstream agreements and the establishment of new DJ Basin midstream contracts. Chevron expects the revised agreements to extend the Bakken contracts and reduce its Bakken unit midstream costs by roughly half, which is anticipated to enhance future earnings and return on capital employed.

In exchange for the improved long-term commercial framework and $200 million in cash, Chevron will transfer its ownership interests and general partner position in Hess Midstream, along with its DJ Basin crude oil midstream assets. The transaction will remove Hess Midstream from Chevron’s balance sheet, including approximately $3.7 billion of the unit's debt. Chevron expects the deal to close by year-end and record a $3 billion to $4 billion one-time after-tax loss.

Andy Walz, Chevron's President of Downstream, Midstream and Chemicals, stated that the transaction resets the commercial framework between its upstream and midstream assets in the Bakken and DJ Basin. He added that it lowers Chevron’s Bakken cost structure while positioning Hess Midstream to advance as an independent company.

Jonathan Stein, CEO of Hess Midstream, noted that the company will be strongly positioned to deliver growth and returns as an independent, multi-basin midstream company with leading positions in the Bakken and DJ Basins. The contracts are in place through 2045.