Why Is Hess Midstream (HESM) Stock Down -13.1% Today?
Key Takeaways
- HESM shares fell roughly 13.1% to about $33.62, down from a prior-session close of $38.69.
- The primary catalyst was a transformative deal in which CVX (Chevron) will divest its entire ownership stake in Hess Midstream and its Denver-Julesburg (DJ) Basin midstream assets.
- The restructured Bakken contracts include lower tariffs and fees from 2027 through 2033, removing a takeover premium the market had previously priced in.
- Chevron plans to cut its Bakken rig count from three to two starting in December 2026, signaling a softer volume-growth outlook.
- Traders are now watching for deal-closing details, updated 2027 guidance, and how the company's new independent, multi-basin structure performs.
Opening Summary
Hess Midstream LP, a fee-based midstream company that owns oil, gas, and produced-water handling assets primarily in the Bakken and Three Forks shale plays of North Dakota, saw its shares plunge on Tuesday after Chevron unveiled a sweeping restructuring of the companies' commercial relationship. HESM stock dropped approximately 13.1% to around $33.62, compared with a previous close of $38.69, as investors digested a transaction that recasts Hess Midstream as an independent, multi-basin operator while simultaneously lowering the tariffs Chevron pays for gathering and processing services.
Catalyst Breakdown
Chevron's Divestiture and Contract Restructuring
The sell-off was driven by a definitive agreement under which CVX will transfer its ownership interests in Hess Midstream — including its general partner position — and its DJ Basin crude oil midstream assets back to Hess Midstream. In exchange, Chevron receives about $200 million in cash and, more importantly, improved Bakken midstream terms that are expected to roughly halve its unit midstream costs. The Bakken contracts are extended from 2033 through 2045, but the revised framework converts cost-of-service arrangements to fixed-fee contracts and reduces tariffs and fees from 2027 through 2033.
For a market that had been valuing HESM partly on the possibility that Chevron would eventually buy out the public float at a premium, the announcement removed that upside. Instead of acquiring minority holders, Chevron is exiting its stake, which will be cancelled, cutting Hess Midstream's outstanding share count by nearly 40%. Chevron will also fully deconsolidate Hess Midstream, including roughly $3.7 billion of its debt, and expects a one-time after-tax loss of approximately $3 billion to $4 billion at closing.
Lower Fees and a Reduced Volume Outlook
Beyond the loss of any takeover premium, the revised commercial terms introduce a structurally lower revenue profile. The amended agreements set a minimum revenue commitment at 80% of Hess Midstream's expected Bakken revenues attributable to Chevron through 2033 — a step-down from prior cost-of-service economics. Adding to the pressure, Chevron disclosed plans to scale back its Bakken drilling program from three rigs to two beginning in December 2026, tempering expectations for near-term throughput growth.
The move follows a string of recent analyst caution. J.P. Morgan downgraded HESM to Underweight in early October, citing material minimum volume commitment step-downs, the risk of a lower 2029 reset, and the 2033 commercial agreement expiry. Those structural uncertainties are now playing out in real time through this transaction.
Market Context and Trading Activity
The decline in HESM was largely company-specific rather than a function of broad energy-sector weakness. The announcement centered on Hess Midstream's unique relationship with Chevron, and the share reaction reflected repositioning around a new corporate structure and lower contracted fee rates. The magnitude of the move — a double-digit percentage decline for a typically defensive, dividend-paying midstream name — indicates that investors were not merely adjusting for the deal's mechanics but also unwinding a valuation premium tied to the former ownership structure. Hess Midstream noted it would host a webcast to discuss the announcement, and preliminary 2027 guidance points to adjusted EBITDA of roughly $850 million to $950 million and free cash flow of $525 million to $625 million.
What Comes Next for HESM
Looking ahead, investors will focus on the transaction's completion, which is expected by the end of 2026 and remains subject to customary closing conditions and regulatory approvals. Until then, the DJ Basin assets remain a proposed acquisition rather than assets operated by Hess Midstream. Key areas of attention include the integration of the Colorado-based gathering and storage assets, the transition of Chevron-provided services under a two-year arrangement, and how the lower Bakken tariffs affect distributable cash flow and the company's capacity to sustain its distribution growth. Risks include potential contract renegotiation outcomes, execution of the multi-basin integration, and any changes to Chevron's development plans in the Bakken. A new corporate name is expected to be finalized before closing.
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HESM's RSI Indicator ascends from oversold territory
The RSI Oscillator for HESM moved out of oversold territory on October 01, 2026. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 16 similar instances when the indicator left oversold territory. In 15 of the 16 cases the stock moved higher. This puts the odds of a move higher at 90%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 38 of 51 cases where HESM's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 75%.
Following a +2.49% 3-day Advance, the price is estimated to grow further. Considering data from situations where HESM advanced for three days, in 235 of 353 cases, the price rose further within the following month. The odds of a continued upward trend are 67%.
HESM may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on September 21, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on HESM as a result. In 36 of 79 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 46%.
The Moving Average Convergence Divergence Histogram (MACD) for HESM turned negative on September 14, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 40 similar instances when the indicator turned negative. In 20 of the 40 cases the stock turned lower in the days that followed. This puts the odds of success at 50%.
HESM moved below its 50-day moving average on September 21, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for HESM crossed bearishly below the 50-day moving average on September 23, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 6 of 18 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 33%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where HESM declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 41%.
The Aroon Indicator for HESM entered a downward trend on October 06, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 4 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (9.597) is normal, around the industry mean (179.095). P/E Ratio (13.269) is within average values for comparable stocks, (22.536). Projected Growth (PEG Ratio) (0.170) is also within normal values, averaging (13.660). Dividend Yield (0.080) settles around the average of (0.050) among similar stocks. P/S Ratio (3.182) is also within normal values, averaging (4.657).
The Tickeron SMR rating for this company is 18 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 20 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 41, placing this stock better than average.
The Tickeron PE Growth Rating for this company is 35 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is 49 (best 1 - 100 worst), indicating steady price growth. HESM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
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General Information
an operator of assets that provide services to third-party crude oil and natural gas producers
Industry OilGasPipelines
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