Chevron Corporation CVX and Woodside Energy have agreed on an asset swap deal to restructure their portfolios and focus on their core projects in Australia. This strategic swap should support both companies to fulfill their long-term goals, focus on efficiency and enhance sustainability.
Per the proposed transaction, Woodside will acquire Chevron’s 16.67% interests in the North West Shelf (NWS) Project, the NWS Oil Project and a 20% stake in the Angel Carbon Capture and Storage (CCS) initiative. In exchange, CVX will acquire a 13% share in the Wheatstone Project and a 65% operating interest in the Julimar-Brunello Project, coupled with a cash payment of up to $400 million.
Key Highlights of the CVX- Woodside Deal
During the last nine months, CVX’s output from the NWS and NWS oil project has averaged 54.5 kboe/d (thousand barrels of oil equivalent per day), and Woodside’s gas output from several offshore fields that include Julimar and Brunello has averaged 34,000 boe/d (barrels of oil equivalent per day).
This deal would position Woodside to progress with the extension of the NWS LNG plant, while the acquisition of Chevron’s stake in the Angel CCS project will help it reduce any emissions associated with its Browse development project. According to Woodside, the deal will strengthen its cash flow for shareholder distribution and ongoing investment and will simplify the NWS joint venture ownership at the same time.
The deal also promises a net increase of 9.6 million barrels of oil equivalent to its proven and probable reserves as of January 2024 for Woodside Energy.
CVX has been streamlining its assets over the past year, divesting its holdings in many companies in Alaska and Canada to prepare for its Hess Corporation acquisition. The deal will also align with CVX’s plans to consolidate its focus on key assets.
Recently, the Western Australian government has also approved the NWS gas project extension until 2070 to support long-term resource processing. This decision is crucial for optimizing joint venture field resources and third-party gas value.
Conditions and Reservations of the Deal
The companies notified that the asset swap deal is subject to several precedent conditions and regulatory approvals.
The deal will be inked only after the completion of the Julimar Phase 3 execution and handover, anticipated in 2026. Julimar Phase 3 is a four-well subsea tieback to the Julimar field production system and its execution phase will be completed by Woodside and thereafter transferred to Chevron on startup.
CVX’s Zacks Rank and Key Picks
California-based Chevron is one of the largest publicly traded oil and gas companies in the world. Currently, CVX has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Gulfport Energy Corporation GPOR,ARC Resources Ltd. AETUF and Flotek Industries, Inc. FTK. While Gulfport Energy currently sports a Zacks Rank #1 (Strong Buy), ARC Resources and Flotek Industries each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The U.S.-based Gulfport Energy Corporation is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties. The Zacks Consensus Estimate for GPOR’s 2024 earnings indicates 108.09% year-over-year growth.
Canada-based ARC Resources is engaged in the exploration, acquisition and development of oil and natural gas properties. AETUF’s expected EPS (earnings per share) growth rate for next year is 50.78%, which aligns favorably with the industry growth rate of 11.50%.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
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