Hess Midstream to acquire Chevron's DJ Basin assets in deal

Hess Midstream LP (NYSE: HESM) has signed a definitive agreement with Chevron to acquire crude oil and natural gas gathering and storage assets in the Denver-Julesburg Basin, a transaction that would also transfer Chevron's ownership interests in Hess Midstream back to the company.

Under the terms of the deal, Hess Midstream will pay Chevron $200 million in cash. In return, Chevron will contribute its consolidated ownership interests in Hess Midstream, comprising 77,827,485 Class B units and 449,000 Class A shares, all of which will be canceled. The cancellation would reduce Hess Midstream's outstanding shares by nearly 40%. Chevron will also transfer its ownership interests in Hess Midstream's general partner, giving Hess Midstream full control of that entity.

The DJ Basin assets being acquired include approximately 400 thousand barrels per day of oil gathering capacity, 300 million cubic feet per day of gas gathering capacity, 420 thousand barrels of storage capacity, and a 20% stake in the Saddlehorn pipeline, a roughly 600-mile FERC-regulated crude oil pipeline connecting the DJ Basin to Cushing, Oklahoma.

As part of the transaction, the two companies will amend their existing Bakken commercial agreements, reducing tariff rates and extending the agreements from 2033 through 2045. Chevron is expected to reduce its Bakken drilling activity from three to two rigs in December 2026.

For 2027, Hess Midstream issued preliminary guidance projecting Adjusted EBITDA of $850 million to $950 million and Adjusted Free Cash Flow of $525 million to $625 million, based on approximately $125 million in capital expenditures. The company expects 2027 leverage in the range of 3.75x to 4.0x Adjusted EBITDA.

Following the closing, all Chevron-affiliated board members will resign. The company's current CEO, Jonathan C. Stein, will remain in that role and join the board. Hess Midstream said it plans to operate under a new name and maintain its Houston headquarters.

The transaction, unanimously approved by Hess Midstream's board, is expected to close by year-end 2026, subject to customary closing conditions, according to a company statement.

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