Chevron's (CVX) restructuring of its Bakken midstream agreements is expected to improve its cost structure and return on capital employed while simplifying its corporate structure, UBS Securities said in a note emailed Wednesday.

The transaction is expected to reduce Chevron's Bakken midstream costs, while the deconsolidation of Hess Midstream (HESM) is expected to remove its debt from Chevron's books, UBS said. The brokerage expects the deal to increase Chevron's net income beginning in 2027.

UBS said the restructured Bakken agreements will reduce tariff rates for Chevron through 2033 and extend the commercial agreements through 2045.

Chevron is expected to move to two drilling rigs in the Bakken from three rigs in December 2026, UBS said. It is also expected to generate about $200 million of incremental annual cash flow starting in 2029, according to the note.

UBS maintained a buy rating with a price target of $220.

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