Hess Midstream (HESM) Plunges 10.99% as Chevron Cuts Bakken Drilling, Revises Guidance

Hess Midstream (HESM) fell 10.99% over two trading days, hitting a new low since April 2025, with an intraday drop of 1.27% on Sept. 22. The decline reflects mounting concerns over operational and strategic headwinds tied to Chevron’s reduced drilling activity in the Bakken shale and revised financial guidance.

Chevron’s decision to cut its rig count in the Bakken from four to three beginning in Q4 2025 has directly impacted Hess Midstream’s throughput volumes. As Chevron is the primary operator in the region, the reduction threatens to plateau oil throughput growth by 2026, while gas volumes are expected to stabilize until 2027. This shift forced Hess Midstream to revise its 2025 adjusted EBITDA forecasts, projecting flat performance in 2026 compared to 2025.

Analysts responded with downgrades and lower price targets. Wells Fargo cut HESM from *Overweight* to *Equal Weight*, reducing its target to $39, while UBS lowered its price target to $43. Both cited Chevron’s reduced rig activity as a key risk, with the buyout scenario now seen as the primary upside catalyst. The company also suspended engineering work on the Capa gas plant, removing it from its 2026-2027 capital plan, further signaling a temporary slowdown in infrastructure expansion.

Despite maintaining its 5% annual distribution growth target through 2027, Hess Midstream faces uncertainty in exceeding minimum volume commitments from Chevron. While fee-based revenue remains stable, near-term throughput and capital spending reductions have dampened investor sentiment. Analysts now emphasize a buyout-driven recovery rather than organic growth, reflecting divergent fair value estimates ranging from $11.87 to $64.17 as of Sept. 2025.

The stock’s volatility underscores the company’s reliance on Chevron’s drilling decisions, introducing concentration risk. While long-term projections include $2.1 billion in 2028 revenue, achieving these targets depends on Chevron’s ability to sustain throughput volumes. Investors remain cautious as the market weighs the likelihood of a buyout against prolonged operational challenges.