Chevron to Divest Hess Midstream & DJ Basin Assets for $200M Cash and Improved Commercial Terms

Executive Summary

On October 6, 2026, Chevron Corporation (NYSE: CVX) reported on Form 8-K (Items 7.01 and 8.01) that several subsidiaries entered into definitive agreements with Hess Midstream LP (NYSE: HESM) to divest Chevron's ownership interests and general partner position in Hess Midstream, as well as its Denver-Julesburg (DJ) Basin crude oil midstream assets.

In exchange, Chevron receives $200 million in cash consideration along with extended commercial contracts that are projected to reduce Chevron's Bakken unit midstream costs by approximately 50%.

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Key Transaction Terms & Financial Implications

1. Asset Divestment & Independence:

   • Chevron transfers its entire equity stake and GP control in Hess Midstream LP, positioning HESM as a standalone independent entity.
   • Transfers Chevron's DJ Basin crude oil midstream infrastructure to Hess Midstream.

2. Balance Sheet Deconsolidation:

   • Hess Midstream will be fully deconsolidated from Chevron’s financial statements upon closing, removing approximately $3.7 billion of HESM debt from Chevron's consolidated balance sheet.

3. Earnings & Capital Efficiency Impact:

   • One-Time Loss: Chevron expects to recognize an estimated one-time after-tax loss of $3 billion to $4 billion upon closing, classified as a special item, primarily reflecting the inability under GAAP to capitalize anticipated future Bakken cost savings as an asset.
   • Return on Capital Employed (ROCE): Projected to be accretive to ROCE by +0.5% on an absolute basis over time due to lower operating cost structures and reduced capital base.

4. Operational Synergies:

   • Approximately 50% reduction in Bakken unit midstream expenses supports long-term upstream development and sustained production.

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Closing Conditions and Timeline

• Approvals: Approved by the Conflicts Committee of the Board of Directors of Hess Midstream's general partner.
• Conditions: Subject to customary closing conditions and required regulatory clearances.
• Expected Close: Targeted by year-end 2026.