Chevron To Divest Its Ownership Interests In Hess Midstream And DJ Basin Crude Midstream Assets; Revised Agreements Expected To Reduce Bakken Unit Midstream Costs By About 50%; To Transfer Hess Midstream Interests And DJ Basin Assets For $200M Cash
Key takeaways
- Chevron’s divestiture of Hess Midstream and DJ Basin assets cuts Bakken costs by ~50% and boosts ROCE, but incurs a $3‑4 billion after‑tax loss today.
- $200 million cash
- 50% cost reduction
- $3.7 billion debt removal
What happened
Chevron Corp. (CVX) will divest its ownership interests in Hess Midstream LP and its DJ Basin crude oil midstream assets, receiving $200 million cash and extending Bakken midstream contracts that are expected to cut Bakken unit costs by about 50%.
Why it matters
The deal removes $3.7 billion of Hess Midstream debt from Chevron’s books, reduces long‑term midstream expenses, and is projected to lift Chevron’s return on capital employed by 0.5% absolute. It also creates a one‑time after‑tax loss of $3‑4 billion, reflecting the inability to capitalize future cost savings.
Short-term and longer-term
Short-term. In the next few days, Chevron’s share price may react to the $3‑4 billion loss, but the long‑term cost savings could support a higher valuation.
Longer-term. Over the coming months, the cost reduction and ROCE lift should enhance Chevron’s long‑term profitability profile.