Chevron Australia and Woodside Energy Group have entered into an asset swap agreement in a move to restructure their respective energy portfolios in Western Australia.
The transaction, effective 1 January 2024, allows both parties to consolidate their focus on projects where they hold operator roles.
Under the agreement, Chevron will acquire Woodside’s stakes in the Wheatstone Project and Julimar-Brunello Project. In exchange, Woodside will receive Chevron’s interests in the North West Shelf (NWS) Project, the NWS Oil Project, and the Angel Carbon Capture and Storage (CCS) Project.
Chevron will also make a cash payment to Woodside of up to $400m as part of the deal.
The asset swap involves Chevron taking over Woodside’s 13% non-operated interest in the Wheatstone Project and its 65% operated interest in the Julimar-Brunello Project. Chevron, in turn, will transfer its 16.67% interests in the NWS Project and NWS Oil Project and a 20% share in the Angel CCS Project to Woodside.
Chevron will provide an initial $300m cash payment upon completion of the transaction, along with up to $100m in contingent payments tied to the completion and performance of the Julimar Phase 3 Project.
The agreement also includes an advance payment of $100m from Chevron to Woodside, refundable if the transaction does not close.
The deal is expected to enable Chevron to strengthen its position in Wheatstone, which processes gas from several fields, including Julimar-Brunello.
Chevron Australia managing director Mark Hatfield said: “This transaction will enable us to consolidate our focus and resources on key assets we operate in Western Australia, in this case our Wheatstone Project.”
Woodside, on the other hand, will become the largest stakeholder in the NWS Project, increasing its share from 33.33% to 50%. The deal also boosts Woodside’s position in carbon capture through a doubled stake in the Angel CCS Project, taking its interest to 40%.
The NWS Oil Project, which includes the Cossack, Wanaea, Lambert, and Hermes oil fields and the Okha floating production, storage, and offloading (FPSO) facility, will also see Woodside’s stake increase from 50% to 66.67%.
Woodside CEO Meg O’Neill said: “The strategic and commercial rationale for this asset swap is compelling for Woodside.
“This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets. It is immediately cash flow accretive and includes a cash payment upon both execution and completion.”
The transaction remains subject to regulatory approvals, including those from the Australian Competition and Consumer Commission and the Foreign Investment Review Board, along with state and federal clearances. It also requires pre-emption rights of joint venture participants to be resolved and the completion of certain abandonment activities.
A critical condition of the transaction is the successful execution of the Julimar Phase 3 Project, which involves a four-well tie-back to the existing Julimar field production system. Woodside will oversee the execution phase of the project before transferring it to Chevron at the project’s start-up, expected in 2026.
As of 30 September 2024, Chevron’s interests in the NWS Project and NWS Oil Project were producing an average of 54,500 barrels of oil equivalent per day (54.5kboe/d), while Woodside’s interest in Wheatstone contributed approximately 34kboe/d.
Upon completion of the transaction, Woodside expects a net increase of 9.6 million barrels of oil equivalent to its Proved plus Probable (2P) Reserves. This reflects the transfer of assets into Woodside’s portfolio, including the expanded stakes in the NWS and Angel CCS Projects.
The transaction is expected to close in 2026, following the completion of the Julimar Phase 3 Project. At closing, the agreement includes customary adjustments for net working capital and interim period cashflows.
Woodside also anticipates additional cashflows of approximately $400m from the use of depreciable tax bases tied to the acquired assets, further enhancing the financial benefits of the transaction.
