Hess Midstream To Pay Chevron $200 Million, Cancel Its Shares And Buy DJ Basin Assets, 8-K Says
The deal would retire Chevron's units and general-partner control, cut shares by nearly 40%, and cut Chevron's Bakken tariffs.
Hess Midstream agreed to pay Chevron $200 million in cash for the general-partner interest, and to buy Chevron's DJ Basin pipeline assets and cancel Chevron's units, an 8-K shows. The agreement was signed October 6 and is meant to make the company independent.
What the 8-K says
The cash covers the interest in the general partner, plus closing working capital of the DJ Basin business, which is subject to a post-closing adjustment. Chevron also gets the right to sign amended Bakken contracts.
Chevron will hand over 77,827,485 Class B units and 449,000 Class A shares, which Hess Midstream will cancel. The company expects its outstanding shares to fall by nearly 40% at closing.
The DJ Basin assets sit mainly in Weld County, Colorado. They include about 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, plus a 20% stake in the Saddlehorn pipeline to Cushing, Oklahoma.
Hess Midstream says it does not expect to pay any material taxes on the transaction.
What it changes
Chevron's Bakken tariffs will drop for 2027 through 2033, and the contracts will run through 2045 instead of 2033. Cost-of-service contracts become fixed-fee with inflation escalators, capped at 3% a year. A minimum revenue commitment is set at 80% of expected Chevron revenue through 2033, and it can only rise once set.
Chevron is expected to move from three to two Bakken rigs in December 2026. Hess Midstream expects Bakken volumes to fall about 5% in 2027 and then plateau from 2028.
Preliminary 2027 guidance, assuming a year-end 2026 close, calls for Adjusted EBITDA of $850 million to $950 million, capital spending of $125 million and adjusted free cash flow of $525 million to $625 million. For 2026 it guides to adjusted EBITDA of $1,225 million to $1,250 million. It expects 2027 leverage of 3.75x to 4.0x adjusted EBITDA.
The four Chevron-affiliated directors will resign at closing. Shareholders will elect directors starting at the first annual meeting, in the second quarter of 2028. John P. Reddy is expected to chair the board, and up to three more independent directors may be added.
Chevron stays the anchor customer. It will also supply staff and services for a two-year transition, and the company will take a new name. CEO Jonathan Stein's offer letter, effective only at closing, sets target annual pay of at least $6.5 million.
What to watch
Closing is expected by year-end 2026 and needs Hart-Scott-Rodino antitrust clearance. Either side can walk if it has not closed by October 6, 2027, with a six-month extension if approvals are outstanding.
Hess Midstream says it will issue updated 2027 guidance after the deal closes.
Sources
- 8-K Filing — Hess Midstream LP (HESM) — SEC EDGAR
- Exhibit d401552dex991.htm — Hess Midstream LP 8-K exhibit — SEC EDGAR
- Hess Midstream LP Announces Transformative Transaction Leading to New Independent Multi-basin Midstream Company – Company Announcement - FT.com — Financial Times
- Hess Midstream (HESM) Becomes Independent With DJ Basin Assets and New Ownership — Yahoo Finance
- Hess Midstream Shares Fall on $200M Restructuring Deal With Chevron — MarketWatch
- Chevron to Divest its Ownership Interests in Hess Midstream and DJ Basin Crude Midstream Assets – Company Announcement - FT.com — Financial Times
- Chevron to Shed Hess Midstream Stake in Major Bakken Restructuring | OilPrice.com — oilprice.com
