Woodside and Chevron have agreed to an asset swap which will shake up gas project ownership in WA, with parts of the North West Shelf and Wheatstone projects and $644 million to change hands.
Woodside and Chevron have agreed to an asset swap which will shake up gas project ownership in WA, with parts of the North West Shelf and Wheatstone projects and $644 million to change hands.
Woodside will swap its 13 per cent interest in Wheatstone and 65 per cent operated interest in the Julimar-Brunello project, in exchange for Chevron's interest 16.67 per cent interest in the North West Shelf project and the NWS oil, and its 20 per cent of the Angel carbon capture and storage project.
Chevron will also make a cash payment of up to $US400 million ($644 million).
The transaction will be backdated to January 1, 2024, but is not expected to be done until the completion and handover of the third phase of Julimar - development of which remains Woodside's responsibility. A final investment decision was taken there last year.
Start-up and handover of that project is slated for 2026.
Woodside chief executive Meg O'Neill said the asset swap had a strategic and commercial rationale.
“This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets," she said.
"It is immediately cash flow accretive and includes a cash payment upon both execution
and completion.
“This year, the North West Shelf Project and its Karratha Gas Plant celebrated 40 years of operations."
The asset swap comes after the state government extended environmental approval for Woodside's North West Shelf project for another 50 years.
"The Western Australian Government’s recent decision to extend the environmental approval for the North West Shelf Project supports its ongoing contribution to reliable energy supply for local and global customers," Ms O'Neill said.
"This transaction creates greater opportunity to fill emerging processing capacity and maximise value accretive recovery from the North West Shelf project.
“It also provides greater alignment and improves the commercial prospects for the proposed Browse to North West Shelf project.
“Additionally, this improves joint venture planning for decarbonisation opportunities at Karratha Gas Plant. 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.”
Chevron Australia managing director Mark Hatfield said the deal allowed his company to simplify its operations.
“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,” he said.
“The North West Shelf Project paved the way for Western Australia and the nation to become international leaders in natural gas and has been operated by Woodside to a world-class standard.
“We have been an active participant in the North West Shelf Project since its foundation over 40 years ago and we are proud of the project’s record as a safe, competitive, and reliable supplier of domestic gas and LNG and its transformation into a tolling facility.”
The deal is subject to several conditions precedent, including regulatory approvals, and the progress at Julimar.
Once the transaction is done, Woodside will own 50 per cent of the NWS project, 66.67 per cent of NWS Oil, and 40 per cent of the Angel CCS project.
It is the operator on all three.
Chevron will own all of Julimar-Brunello, and more than 77 per cent of Wheatstone.
Woodside shares fell 1.7 per cent in early trade, to $23.14.
