Chevron Swaps Hess Midstream Stake for 50% Lower Bakken Costs — and a $200 Million Payment
Key takeaways
- Chevron’s swap with Hess Midstream cuts Bakken midstream costs by 50% but comes with a $3‑4 billion one‑time loss, improving ROCE by 0.5pp.
- $200 million cash payment
- 50% cost reduction
- $3.7 billion Hess Midstream debt
What happened
Chevron Corp. and Hess Midstream LP agreed to swap Chevron’s ownership and general partner stake in Hess Midstream for new Bakken midstream contracts and a $200 million cash payment. The deal will cut Chevron’s Bakken midstream unit costs by roughly 50% and extend the contracts, while Chevron will fully deconsolidate Hess Midstream, including about $3.7 billion of debt.
Why it matters
The transaction is expected to boost Chevron’s return on capital employed by about 0.5 percentage points and support future earnings through lower operating costs. However, Chevron will record a one‑time after‑tax loss of $3 billion to $4 billion at closing, treated as a special item. The deal also signals a tighter…
Short-term and longer-term
Short-term. Chevron’s shares edged up 0.53% to $208.68 after the announcement, while Hess Midstream fell 3.41% to $37.36.
Longer-term. For investors, the deal signals a strategic move to streamline midstream operations and reduce costs, potentially enhancing long‑term profitability.