Chevron to divest Hess Midstream and DJ Basin assets

Chevron Corporation has entered into definitive agreements with Hess Midstream LP to restructure Bakken midstream contracts and establish new DJ Basin midstream contracts. Through this restructuring, Chevron will transfer its ownership interests and general partner position in Hess Midstream, along with its DJ Basin crude oil midstream assets, to Hess Midstream in exchange for $200 million in cash.

The move is intended to reduce Chevron’s Bakken unit midstream costs by approximately 50%. As part of the transaction, Chevron expects to fully deconsolidate Hess Midstream, which includes approximately $3.7 billion of Hess Midstream’s debt. While the company expects the deal to be accretive to return on capital employed, it anticipates recognizing a one-time after-tax loss estimated between $3 billion and $4 billion because it cannot recognize future cost savings as an asset.