The transaction transforms HESM into an independent multi-basin midstream company with a significantly reduced share count and long-term contracts through 2045. The 2027 guidance implies a substantial step-up in scale and cash flow generation. Monitor HSR clearance and closing timeline; the stock should re-rate as the market prices in the new standalone profile and reduced Chevron dependency.
Price Chart
Executive Summary
Hess Midstream LP (HESM) announced a transformative transaction with Chevron to acquire DJ Basin midstream assets and become an independent, multi-basin company. Chevron will contribute 100% of its consolidated ownership interests in HESM (including ~77.8M Class B units and 449K Class A shares, all to be cancelled), reducing outstanding shares by nearly 40%. HESM will pay $200M in cash plus closing working capital. The Bakken commercial agreements will be amended to reduce tariffs and extend terms through 2045, with a minimum revenue commitment. The transaction is expected to close by year-end 2026. HESM provided 2027 preliminary guidance of $850M-$950M Adjusted EBITDA and $525M-$625M Adjusted Free Cash Flow.
Key Financial Metrics
Key Facts
- HESM will acquire Chevron's DJ Basin crude oil and natural gas gathering and storage assets, including a 20% interest in the Saddlehorn long-haul pipeline.
- Chevron will contribute 100% of its consolidated ownership interests in HESM, reducing outstanding shares by nearly 40%.
- HESM will pay $200 million in cash plus closing working capital to Chevron.
- Bakken commercial agreements will be amended to reduce tariffs and extend terms through 2045, with a minimum revenue commitment of 80% of expected revenues through 2033.
- HESM provides 2027 preliminary guidance: Adjusted EBITDA of $850-$950 million, Adjusted Free Cash Flow of $525-$625 million, and capital expenditures of ~$125 million.
- HESM expects to maintain quarterly distributions in 2027 at Q4 2026 levels, fully funded by Adjusted Free Cash Flow.
- The Conflicts Committee unanimously approved the transaction and received a fairness opinion from its financial advisor.
- All Chevron-affiliated directors will resign at closing; the board will become independent with shareholder election rights beginning in 2028.
- CEO Jonathan C. Stein will continue as CEO and join the board; his total target annual compensation will be no less than $6.5 million.
- The transaction is expected to close by year-end 2026, subject to HSR and customary conditions.
Financial Impact
HESM pays $200M cash plus closing working capital; acquires DJ Basin assets with ~400K bpd oil gathering, 300 MMcf/d gas gathering, and 420K barrels storage capacity. 2027E Adjusted EBITDA $850M-$950M, Adjusted FCF $525M-$625M. Outstanding shares reduced by ~40%.
Risk Factors
- Transaction may not close on expected timeline or at all due to HSR or other regulatory conditions.
- Integration of DJ Basin assets may be more costly or disruptive than anticipated.
- Chevron's drilling activity in the Bakken is expected to decline from three to two rigs, reducing throughput volumes by ~5% in 2027.
- Reliance on Chevron for seconded employees and transition services for up to 24 months post-closing creates operational risk.
- 2027 guidance is preliminary and subject to change; actual results may differ materially.
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001193125-26-418053 |
| Document: d401552d8k.htm | 0001193125-26-418053 |
| Document: d401552dex991.htm | 0001193125-26-418053 |
| Document: d401552dex101.htm | 0001193125-26-418053 |
| Document: 0001193125-26-418053-index-headers.html | 0001193125-26-418053 |
| Document: 0001193125-26-418053-index.html | 0001193125-26-418053 |
| Document: 0001193125-26-418053.txt | 0001193125-26-418053 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 4d ago | SC 13G | $30.04 $30.61 | ▲ +1.90% | ▲ +2.42% | $31.24 (+3.99%) |
Oct 12, 2026 14d ago | Institutional Cluster | $32.37 $31.20 | ▼ −3.61% | ▼ −3.60% | $31.24 (−3.49%) |
Oct 8, 2026 17d ago | SC 13D/A | $32.26 $32.37 | ▲ +0.34% | ▲ +0.40% | $31.24 (−3.16%) |
Oct 8, 2026 17d ago | 8-K | $32.26 $32.37 | ▲ +0.34% | ▲ +0.40% | $31.24 (−3.16%) |
Oct 7, 2026 18d ago | SC 13G/A | $34.00 $32.26 | ▼ −5.12% | ▼ −5.72% | $31.24 (−8.12%) |
Aug 3, 2026 12w ago | 8-K | $40.77 $40.28 | ▼ −1.20% | ▼ −3.00% | $31.24 (−23.38%) |
May 4, 2026 25w ago | 8-K | $38.71 $38.38 | ▼ −0.86% | ▼ −1.66% | $31.24 (−19.31%) |
Mar 4, 2026 33w ago | 8-K | $38.08 $39.26 | ▲ +3.10% | ▲ +4.42% | $31.24 (−17.96%) |
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