Chevron Is Taking a $3 Billion to $4 Billion Loss on Hess Midstream. Should You Buy the Stock Anyway?
Key PointsChevron is a global energy giant with a highly diversified business.
Chevron, a world-leading energy company with a market cap of around $440 billion, has agreed to a deal with Hess Midstream LP that will result in a write-off of up to $4 billion. This may seem like a significant financial hit, but it's actually a small percentage of the company's overall scale. Chevron has a strong balance sheet with a debt-to-equity ratio of 0.2x, making it one of the least leveraged companies in its industry.
The deal with Hess Midstream is actually beneficial for both parties, as it allows Chevron to lower its midstream costs in the Bakken region by up to 50%. This is a long-term investment that will provide significant benefits for the company over time. Despite the upfront cost, Chevron's strong dividend history and 3.1% yield make it an attractive option for long-term investors.
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