Chevron Corp. expects to cut unit midstream costs in the Bakken by roughly 50% under restructured agreements with Hess Midstream LP that extend through 2045, while transferring its ownership in the midstream operator and its Denver-Julesburg (DJ) Basin gathering assets in a deal worth $200 million in cash to Chevron.

The company announced the transaction Oct. 6 and said the revised commercial framework should also improve future earnings. Chevron will record a one-time after-tax loss of about $3-4 billion, because it cannot recognize future Bakken midstream cost savings as an asset.

"This transaction resets the commercial framework between our upstream and midstream assets in the Bakken and DJ Basins," said Andy Walz, Chevron's president of downstream, midstream, and chemicals. "It lowers our Bakken cost structure while positioning Hess Midstream to advance as an independent company."

Why is Chevron restructuring now?

The deal follows Chevron's acquisition of Hess Corp. in July 2025, which handed Chevron a 37.8% interest in Hess Midstream — the operator that provides gathering and processing services to Chevron's Bakken production.

Activity has already stepped down. Chevron cut its Bakken drilling program from 4 rigs to 3 in late 2025, prompting Hess Midstream to suspend its planned Capa gas plant and lower throughput and capital-spending expectations. Chevron now expects to drop to 2 rigs in December, and Hess Midstream has based its minimum revenue commitments for 2027-29 on that 2-rig program.

Hess Midstream expects Bakken throughput volumes to decline about 5% in 2027 on reduced Chevron activity, then generally plateau beginning in 2028. Chevron, for its part, expects to sustain Bakken production through technology deployment and operational improvements drawn from its global shale and tight-oil portfolio.

What changes in the Bakken contracts?

Under the revised agreements, tariff rates Chevron pays for crude oil and natural gas gathering and processing in the Bakken fall for 2027-33, and the term runs through 2045. Key structural changes include:

• Conversion of cost-of-service contracts to fixed-fee arrangements with inflation escalators
• A minimum revenue commitment equal to 80% of Hess Midstream's expected Bakken revenues attributable to Chevron through 2033
• Minimum commitments set 3 years in advance, ratcheting upward only, based on Chevron's updated annual development plans
• 2027-29 minimums already established on a 2-rig program, according to Hess Midstream

Hess Midstream said the revised arrangements should support Chevron's continued investment in the Bakken.

What DJ Basin assets change hands?

Hess Midstream will acquire Chevron's crude oil and natural gas gathering and storage assets in the DJ Basin, primarily in Weld County, Colorado. The package includes:

• About 400,000 b/d of oil gathering capacity
• 300 MMcfd of gas gathering capacity
• 420,000 bbl of storage capacity
• Chevron's 20% interest in the Saddlehorn pipeline, a 600-mile, 300,000-b/d FERC-regulated line connecting the DJ Basin to the Cushing, Okla., crude hub

The assets are supported by roughly 670,000 dedicated acres, anchored by agreements with Chevron through 2045 and by contracts with other investment-grade counterparties. Hess Midstream will provide Chevron gathering, transportation, and storage services in the DJ Basin under long-term, fee-based agreements backed by acreage dedications.

How does Chevron exit Hess Midstream?

Chevron transfers its ownership interests in Hess Midstream and its general partner position as part of the deal, and Chevron-affiliated board members will depart. Chevron expects to fully deconsolidate Hess Midstream, removing about $3.7 billion of Hess Midstream debt from its consolidated balance sheet.

"Hess Midstream will be strongly positioned to deliver growth and returns as an independent, multi-basin midstream company with leading positions in the Bakken and DJ Basins and contracts in place through 2045," said Jonathan Stein, Hess Midstream chief executive officer.

Hess Midstream will stay headquartered in Houston and will operate under a new name to be announced before closing.

The watch item: closing is expected by yearend 2026, subject to customary conditions and regulatory approvals.