Hess Midstream to Become Independent Multi-Basin Company with Chevron Deal
Hess Midstream LP (NYSE: HESM) has announced a major transaction with Chevron that will transform it into an independent, multi-basin midstream company. The deal involves Hess Midstream acquiring Chevron's DJ Basin crude oil and natural gas gathering and storage assets. Chevron will contribute its ownership interests in Hess Midstream, including 100% of the General Partner, in exchange for Hess Midstream canceling all contributed interests. The transaction also includes a $200 million cash payment from Hess Midstream to Chevron.
The DJ Basin assets include approximately 400 thousand barrels per day of oil gathering capacity, 300 million cubic feet per day of gas gathering capacity, and 420 thousand barrels of storage capacity. These assets are supported by about 670 thousand dedicated acres, anchored by agreements with Chevron through 2045. Hess Midstream expects to become one of the largest midstream companies in the DJ Basin by volumes gathered.
As part of the transaction, Hess Midstream and Chevron will amend their existing Bakken commercial agreements. This includes reducing tariff rates payable by Chevron for crude oil and gas gathering and processing services in the Bakken from 2027 through 2033 and extending the agreements through 2045. The agreements will convert to a fixed-fee basis with inflation escalators and include an aggregate minimum revenue commitment set at 80% of Hess Midstream's expected Bakken revenues attributable to Chevron through 2033.
Hess Midstream has updated its 2026 financial and throughput guidance, projecting net income of $650 - $675 million, adjusted EBITDA of $1,225 - $1,250 million, and adjusted free cash flow of $910 - $935 million. For 2027, assuming the transaction closes by year-end 2026, the company expects adjusted EBITDA of $850 - $950 million, capital expenditures of $125 million, and adjusted free cash flow of $525 - $625 million. The company plans to maintain distributions at fourth quarter 2026 levels on a per share basis.