HESM

Hess Midstream (HESM) has fallen 20% following Chevron's announcement to divest its stake, but analysts argue the market overreacted. Despite lower fees from Chevron in the Bakken Shale through 2033, the company offers a 10% dividend yield and benefits from a 40% reduction in share count, positioning it as a potential long-term wealth builder for patient investors.

Chevron is taking a $3-4 billion write-off on its Hess Midstream deal as part of portfolio integration following its 2025 Hess acquisition. Despite the near-term cost, the deal is expected to reduce Chevron's midstream costs in the Bakken region by up to 50%, positioning the company for long-term profitability. With a strong balance sheet, 38 consecutive years of dividend increases, and a 3.1% yield, Chevron remains an attractive buy-and-hold energy stock for dividend investors.

Chevron is divesting its ownership stake in Hess Midstream and DJ Basin crude oil midstream assets in exchange for reduced tariff rates on midstream services in the Bakken through 2045. While the deal results in a $3-4 billion one-time after-tax loss, it will reduce Chevron's Bakken midstream costs by 50% and simplify its balance sheet by removing $3.7 billion in debt. Hess Midstream gains independence and diversification as a multi-basin operator, with the deal being accretive to both companies' shareholders long-term.

Chevron will divest its interests in Hess Midstream and DJ Basin assets for $200 million while securing improved commercial terms. The deal is expected to reduce Bakken unit midstream costs by approximately 50%, extend agreements through 2045, and deconsolidate $3.7 billion in debt.

However, Chevron will record a one-time after-tax loss of $3-4 billion at closing. The transaction aims to improve capital efficiency and upstream returns.