Hess Midstream said Oct. 6 it agreed to buy Chevron’s crude oil and natural gas gathering and storage assets in the Denver-Julesburg basin, a deal that will also reshape its ownership and cut its share count by nearly 40% at closing.
The company said Chevron will contribute its entire consolidated ownership stake in Hess Midstream, including 77,827,485 Class B units and 449,000 Class A shares, all of which will be canceled. Chevron will also contribute its ownership interests in Hess Midstream’s general partner. In exchange, Hess Midstream will pay Chevron $200 million in cash.
Hess Midstream said the transaction will bring in DJ basin assets with about 400,000 barrels per day of oil gathering capacity, 300 million cubic feet per day of gas gathering capacity, and 420,000 barrels of storage capacity. The assets also include a 20% stake in the Saddlehorn pipeline, a roughly 600-mile line with 300,000 barrels per day of capacity connecting the DJ basin to Cushing, Oklahoma.
The company said the DJ assets are supported by about 670,000 dedicated acres and include contracts with Chevron through 2045 as well as other investment-grade counterparties.
At the same time, Hess Midstream and Chevron will amend their existing Bakken commercial agreements. The company said tariffs and fees in the Bakken will be reduced for 2027 through 2033, while the agreements will be extended from 2033 to 2045. Hess Midstream said the Bakken contracts will move from cost-of-service to fixed-fee pricing with inflation escalators. It also said the agreements will include an aggregate minimum revenue commitment equal to 80% of expected Bakken revenues attributable to Chevron through 2033.
For 2026, Hess Midstream updated guidance to net income of $650 million to $675 million, adjusted EBITDA of $1.225 billion to $1.25 billion, and adjusted free cash flow of $910 million to $935 million. It also lifted its expected 2026 throughput ranges to 435,000 to 445,000 MMcf per day of gas gathering, 110,000 to 120,000 barrels per day of crude oil gathering, 425,000 to 435,000 MMcf per day of gas processing, 120,000 to 130,000 barrels per day of crude terminals, and 120,000 to 130,000 barrels per day of water gathering.
Looking ahead to 2027, the company gave preliminary guidance for adjusted EBITDA of $850 million to $950 million, capital expenditures of about $125 million, and adjusted free cash flow of $525 million to $625 million. Hess Midstream said that after the transaction closes, it expects 2027 gross adjusted EBITDA margin of about 75%.
The company said it expects 2027 leverage of 3.75x to 4.0x adjusted EBITDA, with long-term leverage falling to 3.5x to 3.75x. It also said it expects to maintain quarterly distributions in 2027 at the fourth-quarter 2026 level and target annual distribution-per-Class A share growth of 5% on an annualized basis in the third and fourth quarters of 2026.
Operationally, Hess Midstream said total combined oil, gas and water gathering volumes should rise with the addition of DJ basin volumes, while Bakken throughput is expected to fall about 5% in 2027 before flattening in 2028. The company said Chevron is expected to move from three drilling rigs to two in the Bakken in December 2026.
Governance will also change at closing. Chevron-affiliated board members will resign, Jonathan Stein will remain chief executive and join the board, and John P. Reddy is expected to become chair. Hess Midstream said shareholders will gain the right to elect board members beginning in 2028. The market has reacted to these announcements by moving the company's shares -14.63% to a price of $33.03. If you want to know more, read the company's complete 8-K report here.
