Chevron Expects $3 Billion To $4 Billion After-Tax Loss To Halve Its Bakken Midstream Costs
The company plans to hand Hess Midstream its stake and DJ Basin assets, with closing targeted by year-end 2026.
Chevron expects a one-time after-tax loss of about $3 to $4 billion when it closes a deal to give up its Hess Midstream stake, according to an 8-K filed Tuesday. In return, it gets Bakken contracts it says will cut its unit midstream costs by about 50%.
What the filing and release say
Chevron said in a news release that subsidiaries signed definitive agreements with Hess Midstream LP. They restructure its Bakken midstream contracts and set up new DJ Basin midstream contracts.
Chevron will transfer its ownership interests and general partner position in Hess Midstream, plus its DJ Basin crude oil midstream assets. It gets the improved long-term commercial terms and $200 million in cash.
The company expects to fully deconsolidate Hess Midstream, which takes about $3.7 billion of Hess Midstream's debt off its books. It also expects the deal to add 0.5% on an absolute basis to return on capital employed.
The loss exists, Chevron said, because it cannot book the future Bakken midstream savings as an asset. It expects to treat the charge as a special item, meaning it is excluded from adjusted earnings.
What it changes
Chevron is taking a large accounting hit now in exchange for lower recurring costs in North Dakota. The 8-K calls the loss a preliminary accounting assessment, to be recognized at closing.
Andy Walz, Chevron's President of Downstream, Midstream and Chemicals, said the deal "resets the commercial framework between our upstream and midstream assets in the Bakken and DJ Basins." He said it "lowers our Bakken cost structure while positioning Hess Midstream to advance as an independent company."
Chevron said it expects to sustain Bakken production through technology and operational improvements drawn from its global shale and tight portfolio.
In after-hours trading Tuesday, CVX shares were at $207.75, up 0.08% from the regular close of $207.58, a reading from light volume (market data).
Approvals and timing
The Conflicts Committee of the board of Hess Midstream's general partner, made up entirely of independent directors, approved the deal after consulting its own legal and financial advisors.
The deal is subject to customary closing conditions and regulatory approvals, and is expected to close by year-end 2026. BofA Securities and Latham & Watkins advise Chevron; Evercore and Gibson, Dunn & Crutcher advise the committee.
The filing lists risks including litigation over the transaction and the possibility that the expected benefits are not realized on time.
The loss lands at closing, which Chevron expects by year-end 2026, and the 50% unit-cost cut is its stated payoff.
Sources
- 8-K Filing — CHEVRON CORP (CVX) — SEC EDGAR
- Exhibit cvxoct2026ex991.htm — CHEVRON CORP 8-K exhibit — SEC EDGAR
- Chevron Strengthens Namibia Position Ahead of Nabba-1X Well — Yahoo Finance
