BAKU, Azerbaijan, October 7. Chevron
Corporation has agreed to transfer its ownership interests and
general partner position in Hess Midstream LP, along with its crude
oil midstream assets in the DJ Basin, to Hess Midstream as part of
a restructuring of their existing commercial arrangements.


The company said that under a series of definitive agreements,
Chevron and Hess Midstream will restructure the company’s Bakken
midstream contracts and establish new agreements covering DJ Basin
midstream activities.


The revised Bakken agreements will extend the existing contracts
and are expected to reduce Chevron’s Bakken unit midstream costs by
approximately 50%, according to Chevron.


In exchange for the new long-term commercial framework and $200
million in cash consideration, Chevron will transfer its Hess
Midstream ownership interests, its general partner position and its
DJ Basin crude oil midstream assets to Hess Midstream.


As a result of the transaction, Chevron expects to fully
deconsolidate Hess Midstream, including approximately $3.7 billion
of Hess Midstream debt.


Chevron expects the deal to increase its return on capital
employed by 0.5 percentage points on an absolute basis, while
generating long-term economic value through lower costs and
improved earnings.


However, Chevron expects to record a one-time after-tax loss of
approximately $3 billion–$4 billion when the transaction closes.
The company said this reflects its inability to recognize future
savings from lower Bakken midstream costs as an asset.







“This transaction resets the commercial framework between our
upstream and midstream assets in the Bakken and DJ Basins,” Andy
Walz, Chevron’s President of Downstream, Midstream and Chemicals,
said.


He added that the agreement would lower Chevron’s Bakken cost
structure while positioning Hess Midstream to advance as an
independent company.


Chevron said it expects to maintain Bakken production through
continued deployment of technology and operational improvements
across its shale and tight-oil portfolio.


The transaction has been approved by the Conflicts Committee of
the board of directors of Hess Midstream’s general partner, which
is composed entirely of independent directors. The deal remains
subject to customary closing conditions and regulatory approvals
and is expected to close by the end of 2026.


BofA Securities is serving as financial advisor to Chevron,
while Latham & Watkins LLP is acting as its legal advisor. Evercore
is advising the Conflicts Committee, with Gibson, Dunn & Crutcher
LLP serving as its legal counsel.