Hess Midstream LP (NYSE:HESM) stock fell 0.68% (As on September 23, 11:24:29 AM UTC-4, Source: Google Finance) after Wells Fargo downgraded the company to Equal Weight from Overweight with a price target of $39, down from $48. Chevron’s (CVX) decision to move to three rigs in the Bakken from group significantly reduces Hess Midstream’s EBITDA growth and capital return, the firm tells investors in a research note.

The downgrade comes as Chevron reduces its rig count from four to three, significantly impacting Hess Midstream’s growth prospects and capital return potential. Wells Fargo now forecasts Hess Midstream to grow at a low single-digit CAGR on a standalone basis, with materially reduced capital return compared to previous projections. The firm estimates total return for Hess Midstream now stands at approximately 13% (comprising 8% yield, 3% dividend growth, and 2% buybacks), down from 21% in its prior assessment. According to Wells Fargo, Hess Midstream “no longer offers sector-leading capital return” under the new three-rig setup, with a potential buyout now representing the main catalyst for the stock.

In other recent news, Hess Midstream LP reported strong financial performance for the second quarter of 2025, with earnings per share of $0.74, surpassing analyst expectations of $0.66. The company’s revenue also exceeded projections, reaching $414.2 million compared to the anticipated $405.13 million. This positive performance comes as Hess Midstream adjusts its financial outlook through 2027, following Chevron’s decision to reduce Bakken drilling activity. The midstream operator expects oil throughput volumes to plateau in 2026, while gas throughput volumes are projected to grow through at least 2027. In light of these developments, UBS downgraded Hess Midstream from Buy to Neutral, citing concerns over potential reduced drilling activity in the Bakken region due to low commodity prices. Additionally, there has been a leadership change at Hess Midstream, with John A. Gatling resigning as President and Chief Operating Officer, and Michael S. Bast appointed as his successor. These recent developments highlight Hess Midstream’s dynamic operational and financial landscape.

Additionally, Energy shares took a hit as commodity prices weakened. The NYSE Energy Sector Index slipped 1.4%, and the Energy Select Sector SPDR Fund lost 1.5%. Oilfield service providers fared even worse, with the Philadelphia Oil Service Sector Index down 2.4%. Futures for both West Texas Intermediate and Brent crude oil fell 1.2% each, now sitting at $62.81 and $66.63 per barrel. US natural gas futures landed at $2.87 per million BTU, a 2.3% decline. While most of the energy market was under pressure, investors turned to the defensive utilities sector, pushing the Dow Jones US Utilities Index up 0.2%.