Woodside, Chevron in Australian asset swap
Woodside Energy said December 18 it had agreed an asset swap with US major Chevron that will see the Australian company acquire Chevron’s interests in the North West Shelf (NWS), NWS Oil and Angel Carbon Capture and Storage (CCS) projects in exchange for all of its interests in both the Wheatstone LNG and Julimar-Brunello projects.
Chevron will also make a cash payment to Woodside of up to $400mn.
Woodside said the transaction would streamline its Australian portfolio and consolidate its focus on operated LNG assets, while simplifying the ownership structure of the various NWS assets.
“The strategic and commercial rationale for this asset swap is compelling for Woodside,” Woodside CEO Meg O’Neill said. “This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets.”
Under the proposed transaction, Woodside will transfer its 13% non-operated interest in Wheatstone LNG and its 65% operated interest in the Julimar and Brunello gas fields, which supply Wheatstone, and will acquire Chevron’s 16.67% interests in the NWS assets and a 20% interest in the Angel CCS project.
The swap will increase Woodside’s interest in the NWS Project to 50%, the NWS Oil Project to 66.67% and the Angel CCS project to 40%. It will have no interests in the Wheatstone LNG or Julimar-Brunello assets.
This year, O’Neill said, the NWS Project and its Karratha gas plant marked 40 years of operations, while the Western Australia government recently extended environmental approvals for the project, creating greater opportunity to fill processing capacity and improving the commercial prospects of the proposed Browse to North West Shelf Project.
“Additionally, this improves joint venture planning for decarbonisation opportunities at Karratha gas plant,” she said. “Our increased equity in the Angel CCS project also supports future development of this large-scale, multi-user carbon capture and storage hub in Western Australia.”
The effective date of the transaction is January 1, 2024 and is subject to certain conditions precedent, including Australian competition and foreign investment review clearances and other federal, state and regulatory approvals.
It is also subject to the completion of the ongoing Julimar Phase 3 expansion project, execution and handover of which is expected in 2026, and the completion of certain abandonment activities. Woodside will continue to operate the execution phase of the four-well expansion and will transfer the asset to Chevron at start-up.
The cash payment by Chevron consists of a $300mn payment at completion of the transaction, estimated in 2026, and additional contingent payments of up to $100mn related to the handover of Julimar Phase 3 and subsequent production performance. Chevron will make an advance payment of $100mn on execution of the transaction, which is refundable should the transaction fail to complete.