Hess Midstream shares tumbled Wednesday after the company agreed to acquire Chevron's midstream assets in Colorado and buy out its controlling stake in the pipeline operator.

Shares fell over 16% to $32.47.

Under the terms of the deal, Hess Midstream will acquire Chevon's Colorado crude oil and natural gas gathering assets, take full control of its general partner, and cancel roughly 40% of its outstanding shares.

The move transforms Hess as an independent, multi-basin midstream company.

In exchange, Hess will pay Chevron $200 million in cash and cut tariffs while extending the terms of the agreements through 2045.

The company has set a preliminary guidance for 2027 after the transaction has been completed, which includes adjusted earnings before interest, taxes, depreciation and amortization of $850 million to $950 million and adjusted free cash flow of between $525 million and $625 million.

Hess plans to spend $125 million in capital expenditures across its basins.

Total oil, gas and water gathering volumes are expected to increase with the additions of volume gathered at the DJ Basin. In its Bakken operations, the company expects throughput volumes to decline 5% in 2027 due to reduced Chevron activity.