Hess Midstream (HESM) entered into a Purchase and Sale Agreement with subsidiaries of Chevron Corporation to acquire Chevron's midstream assets in the Denver Julesburg (DJ) Basin and all of Chevron's consolidated ownership interests in HESM, including its general partner. This strategic transaction simplifies HESM's corporate structure, transitions it to an independent, publicly-governed entity, and is expected to reduce the company's outstanding shares by nearly 40% upon closing.
Key Details
- Transaction Terms: HESM will pay Chevron's subsidiaries $200 million in cash plus working capital. Consideration also includes granting Chevron revised Bakken commercial agreements with reduced tariff rates and fees, which are offset by a new minimum revenue commitment until December 31, 2033.
- Asset Acquisition: HESM will acquire Chevron's DJ Basin midstream assets, which include approximately 400,000 barrels/day of oil gathering capacity, 300 million cubic feet/day of gas gathering capacity, 420,000 barrels of storage capacity, and a 20% interest in the Saddlehorn pipeline.
- Corporate Simplification: The agreement includes the purchase and cancellation of all Class A and Class B units held by Chevron, which is expected to reduce total outstanding HESM shares by nearly 40%. HESM will also acquire its general partner, eliminating Chevron's control rights.
- Governance & Timeline: All four Chevron-affiliated directors are expected to resign from the board at closing. The transaction is anticipated to close by year-end 2026, subject to customary closing conditions and regulatory approvals.