Hess Midstream LP to Acquire Chevron DJ Basin Assets in $200 Million Governance Shakeup

Key numbers

Deal value	$200M
Share of market cap	4.6%
Share of annual revenue	12.4%

Key highlights

• Hess Midstream to pay $200 million cash and cancel Chevron's 40% equity stake in the company
• Acquisition includes DJ Basin assets with 400,000 bpd oil and 300 million cfpd gas gathering capacity
• Existing Bakken commercial agreements extended through 2045 with revised tariff structures
• Establishment of an independent board and business model following acquisition of 100% of the General Partner
• Preliminary 2027 guidance projects Adjusted EBITDA between $850 million and $950 million

Deal Structure and Consideration

Under the definitive Purchase and Sale Agreement, Hess Midstream LP will pay $200 million in cash to Chevron subsidiaries for the General Partner interest and the Denver Julesburg Basin assets. Concurrently, Chevron will contribute its entire 40% consolidated equity stake in Hess Midstream back to the company for cancellation. This equity contribution includes 449,000 Class A shares and over 77.8 million Class B units. The deal, expected to close by the end of 2026, effectively reduces the total outstanding share count by approximately 40%, significantly altering the partnership’s capital structure and internal governance.

Acquired Asset Specifications

• DJ Basin gathering capacity of approximately 400,000 barrels of oil per day
• Natural gas gathering infrastructure supporting 300 million cubic feet per day
• Crude oil storage facilities in Weld County, Colorado, totaling 420,000 barrels
• A 20% minority interest in the 600-mile Saddlehorn long-haul crude oil pipeline
• Saddlehorn pipeline connects the DJ Basin to the Cushing, Oklahoma storage hub

Strategic Rationale and Independence

The transaction establishes Hess Midstream as an independent entity by acquiring 100% of its General Partner interests from Chevron. Strategically, the move transforms the partnership from a Bakken-focused operator into a multi-basin midstream company. To ensure long-term operational stability, Hess Midstream and Chevron amended their Bakken commercial agreements, extending the terms through 2045. These amendments align long-term interests by reducing tariffs in exchange for the term extension, which is intended to support Chevron’s continued investment and drilling activity within the Bakken region through the next two decades.

Financial Context and 2027 Outlook

For the 2027 fiscal year, Hess Midstream issued preliminary guidance reflecting the post-transaction structure. Adjusted EBITDA is projected between $850 million and $950 million, supported by an estimated 75% Gross Adjusted EBITDA Margin. The company anticipates Adjusted Free Cash Flow of $525 million to $625 million, which will fund capital expenditures of approximately $125 million across the DJ and Bakken basins. Management intends to maintain quarterly distributions at the expected 2026 year-end level, targeting a long-term leverage range of 3.5x to 3.75x Adjusted EBITDA as debt levels normalize.

Down 8.2% since our story on 8 Oct: $34.00 when we broke it → $31.20 at the close on 13 Oct. Daily closing prices. Source: Yahoo Finance.

Show the prices

14 Sep	$39.89
15 Sep	$39.85
16 Sep	$39.58
17 Sep	$40.09
18 Sep	$40.16
21 Sep	$39.58
22 Sep	$39.17
23 Sep	$38.78
24 Sep	$38.47
25 Sep	$38.25
28 Sep	$38.48
29 Sep	$37.63
30 Sep	$37.37
1 Oct	$38.05
2 Oct	$37.75
5 Oct	$38.41
6 Oct	$38.69
7 Oct	$33.03
8 Oct	$34.00
9 Oct	$32.26
12 Oct	$32.37
13 Oct	$31.20

Hess Midstream LP · financial snapshot

Share price	$34.00
Market cap	$4.4B
Revenue (annual)	$1.6B
P/E (TTM)	11.7×
1-month price change	-17.01%
Sector	EnergyOil & Gas Midstream

Reference market data from a third-party provider, as of the story. Not a valuation or a recommendation.