Chevron has agreed to divest its Hess Midstream stake and Denver-Julesburg (DJ) Basin midstream holdings — roughly 400,000 barrels per day of oil gathering capacity — to Hess Midstream in exchange for $200m in cash and Bakken midstream contracts extended to 2045.

The package also includes 300 million cubic feet per day of gas gathering capacity, about 420,000 barrels of storage and a 20% interest in the Saddlehorn pipeline that runs from the DJ Basin to Cushing, Oklahoma. Assets are sited primarily in Weld County, Colorado, with roughly 670,000 dedicated acres under long-term producer commitments running to 2045.

What is Chevron getting in return?

Chevron receives revised Bakken midstream agreements the company expects will halve its unit midstream costs in the play. The restructured deals convert from cost-of-service to a fixed-fee basis with inflation escalators and reduce Chevron's tariff rates for gathering and processing services from 2027 through 2033. A minimum revenue commitment set at 80% of Hess Midstream's expected Bakken revenues from Chevron covers the same window.

Chevron downstream, midstream and chemicals president Andy Walz framed the deal as a portfolio reset: "This transaction resets the commercial framework between our upstream and midstream assets in the Bakken and DJ Basins. It lowers our Bakken cost structure while positioning Hess Midstream to advance as an independent company."

What does the deal do to Chevron's balance sheet?

Chevron will fully deconsolidate Hess Midstream, removing roughly $3.7bn of the partnership's debt from its books at closing. The transaction triggers a one-time after-tax loss of $3bn–$4bn because Chevron cannot recognise future Bakken midstream cost savings as an asset. The restructured contracts are expected to lift return on capital employed by 0.5% on an absolute basis.

The deal has cleared Hess Midstream's conflicts committee and remains subject to customary closing conditions and regulatory approvals. Chevron is targeting a year-end 2026 close.

How does the Bakken rig plan change?

Chevron plans to cut its Bakken drilling programme from three rigs to two beginning December 2026, consolidating activity around what the company described as technology deployment and operational improvements drawn from its global shale and tight portfolio.

Hess Midstream, in turn, will operate as an independent multi-basin midstream company. Updated 2026 guidance and preliminary 2027 expectations:

• Adjusted EBITDA: $850m–$950m (2026)
• Free cash flow: $525m–$625m (2027)

Who advised on the transaction?

BofA Securities and Latham & Watkins advised Chevron. Evercore and Gibson, Dunn & Crutcher advised the Hess Midstream conflicts committee.

Watch items

Closing hinges on regulatory clearance in the second half of 2026, followed by the rig step-down from three to two in December and the tariff schedule reset in 2027. Operators will track Hess Midstream's standalone margin guidance as the first test of the fixed-fee structure replacing Chevron's upstream consolidation support.