Chevron Offloads Hess Midstream Assets for Cost Savings, Incurs a $3 Billion to $4 Billion Loss
Chevron has agreed to divest its stake in Hess Midstream and transfer DJ Basin crude oil midstream assets as part of an agreement that will simplify operations and reduce future costs. The deal includes the cancellation of nearly 40% of Hess Midstream's outstanding shares, along with a $200 million cash payment from Hess Midstream to Chevron. In exchange for these transfers, Chevron receives extended commercial terms on midstream services in the Bakken region through 2045 and expects its costs there to drop by about half. The transaction will result in an after-tax loss of between $3 billion and $4 billion due to the transfer of valuable assets. However, it is expected to improve Chevron's future earnings and free cash flow from the Bakken region through 2029. The deal also removes approximately $3.7 billion in debt by deconsolidating Hess Midstock on Chevron’s balance sheet. For Hess Midstream, this move transforms it into a fully independent multi-basin midstream company with expanded operations and third-party revenue opportunities.
