Chevron is preparing to exit its ownership position in Hess Midstream and transfer its Denver-Julesburg Basin midstream assets under a transaction designed to lower the oil major’s Bakken transportation and processing costs.
The Houston-based company announced the agreement with Hess Midstream LP on October 6, 2026, saying the revised commercial arrangements could reduce Chevron’s Bakken unit midstream costs by approximately 50 per cent.
The transaction is expected to close by the end of 2026, subject to customary closing conditions and regulatory approvals.
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What Chevron is transferring
Chevron will contribute its consolidated ownership interests in Hess Midstream, including its general partner position, while Hess Midstream will acquire Chevron’s crude oil and natural gas gathering, processing and storage assets in Colorado’s DJ Basin.
Hess Midstream will also pay Chevron $200 million in cash as part of the transaction.
The companies said Hess Midstream’s outstanding shares are expected to decline by nearly 40 per cent when the deal closes because the interests contributed by Chevron will be cancelled.
The DJ Basin assets include approximately 400,000 barrels per day of oil-gathering capacity, 300 million cubic feet per day of gas-gathering capacity and 420,000 barrels of storage capacity.
The portfolio also includes a 20 per cent interest in the Saddlehorn pipeline, a roughly 600-mile crude oil system connecting the DJ Basin with the Cushing storage hub in Oklahoma.
Why the Bakken agreement matters
Chevron will receive revised long-term commercial terms for its Bakken operations in North Dakota, where Hess Midstream provides gathering, transportation, processing and storage services.
The amended agreements will reduce tariffs and fees paid by Chevron between 2027 and 2033, while extending the agreements through 2045.
Chevron said the lower cost structure should improve future earnings and return on capital employed while supporting continued upstream activity in the Bakken.
Hess Midstream said the revised arrangements will give it long-term contracts in both the Bakken and DJ Basin and increase the proportion of revenue generated from third-party customers.
The company expects to operate as an independent, multi-basin midstream business after closing, with a new name to be finalized before the transaction is completed.
Financial impact for Chevron
Chevron expects to fully deconsolidate Hess Midstream as a result of the transaction, including approximately $3.7 billion of Hess Midstream debt.
The company also expects to record a one-time after-tax loss of approximately $3 billion to $4 billion when the deal closes.
Chevron said the accounting loss reflects its inability to recognize the future value of the Bakken cost savings as an asset at the time of the transaction.
The company nevertheless expects the arrangement to increase return on capital employed by approximately 0.5 percentage points on an absolute basis.
| Part of the agreement | Expected result |
|---|---|
| Chevron ownership interests | Transferred to Hess Midstream and cancelled |
| DJ Basin assets | Acquired by Hess Midstream |
| Cash consideration | $200 million paid to Chevron |
| Bakken contracts | Lower tariffs and terms extended through 2045 |
| Closing target | By the end of 2026 |
What happens next
The transaction must satisfy regulatory requirements and other customary closing conditions before it can be completed.
Chevron said the deal was approved by the conflicts committee of Hess Midstream’s general partner after the committee consulted independent legal and financial advisers.
Hess Midstream’s board also approved the agreement, according to the company’s transaction announcement.
After closing, Chevron-affiliated directors are expected to leave the Hess Midstream board, with shareholders gaining the right to elect directors beginning in 2028.
The agreement follows Chevron’s broader effort to reshape its portfolio after completing its acquisition of Hess and integrating Hess’s oil and gas operations.
For Chevron, the immediate focus is expected to be on maintaining access to Bakken infrastructure at lower cost while reducing its direct ownership of a midstream company.
For Hess Midstream, the transaction would expand its operating footprint beyond the Bakken and create a separate midstream company with assets in two major U.S. oil-producing regions.
Frequently Asked Questions
What is Chevron doing with Hess Midstream?
Chevron plans to transfer its ownership interests in Hess Midstream and its DJ Basin midstream assets under an agreement expected to close by the end of 2026.
How much cash will Chevron receive?
Hess Midstream will pay Chevron $200 million in cash as part of the transaction.
What happens to Chevron’s Bakken operations?
Chevron will continue using Hess Midstream infrastructure in the Bakken under revised agreements with lower tariffs and terms extending through 2045.
Why does Chevron expect a large accounting loss?
Chevron expects a one-time after-tax loss of approximately $3 billion to $4 billion because future Bakken cost savings cannot be recorded as an asset at closing.
Will Hess Midstream become independent?
Yes, Hess Midstream expects to operate as an independent multi-basin midstream company after the transaction closes, subject to required approvals.
Fact-Checked: Key transaction terms, financial figures, asset capacities and closing conditions were checked against Chevron’s announcement, Hess Midstream’s transaction release and Chevron’s SEC filing. ([chevron.com](https://www.chevron.com/newsroom/2026/q4/chevron-to-divest-its-ownership-interests-in-hess-midstream-and-dj-basin-crude-midstream-assets?utm_source=openai))
Disclaimer: The transaction remains subject to regulatory approvals and other closing conditions, and its final financial impact may differ from current estimates.