Chevron will take a write-off of up to $4 billion on a deal with Hess Midstream LP. The Motley Fool's Reuben Gregg Brewer argues the charge is small for a company of Chevron's size and that the deal should lower midstream costs in the Bakken region.
Chevron faces a write-off of up to $4 billion from its agreement with Hess Midstream LP. Motley Fool analyst Reuben Gregg Brewer says the charge is a fairly small figure given the company's size and diversification.
What Chevron is handing to Hess Midstream
Chevron is basically giving Hess Midstream assets and absorbing the cost, which is why the deal involves a one-time write-off. The assets include Chevron's ownership interest in Hess Midstream, with its general partner interest, plus some of Chevron's own midstream assets.
The Hess Midstream stake came to Chevron when it completed its acquisition of Hess in 2025. Brewer therefore describes the move as partly about Chevron cleaning up its portfolio as it integrates the Hess business.
Lower Bakken costs and a strong balance sheet
In return, Chevron will materially lower its midstream costs in the Bakken region. Management believes the reduction could be as much as 50%, according to the article.
Brewer also points to the company's financial position. With a market cap of around $440 billion, Chevron is one of the world's largest energy companies, and its debt-to-equity ratio of roughly 0.2x is topped for low leverage only by ExxonMobil at around 0.16x.
The dividend case
Brewer's view is that investors should treat the charge as Chevron paying now to benefit from lower costs for years to come. He points to 38 consecutive annual dividend increases as evidence of the company's long-term thinking.
Chevron's 3.1% yield sits above the energy industry average of 2.4%, which Brewer says makes it a candidate for a buy-and-hold dividend stock.
Source: The Motley Fool
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