PERTH, Australia - Woodside (OTC:WOPEY) Energy Group Ltd. (market capitalization: $27.23 billion), currently trading near its 52-week low at $14.38, has entered into an agreement with Chevron Corporation (NYSE:CVX) for a significant asset swap, marking a strategic consolidation of its liquefied natural gas (LNG) operations in Australia. According to InvestingPro analysis, Woodside maintains a strong financial health score of 2.65 and appears undervalued based on its Fair Value assessment. The deal involves Woodside acquiring Chevron's interests in the North West Shelf (NWS) Project, NWS Oil Project, and Angel Carbon Capture and Storage (CCS) Project. In return, Woodside will transfer its interests in the Wheatstone and Julimar-Brunello projects to Chevron, along with a cash payment of up to $400 million.
The transaction is aimed at streamlining Woodside's Australian portfolio by focusing on operated LNG assets and simplifying the NWS joint venture ownership structure. This is expected to unlock economic recovery from current production and foster future development opportunities. According to Woodside CEO Meg O'Neill, the asset swap is "immediately cash flow accretive" and will enhance shareholder distributions and ongoing investments. The company's strong dividend track record of 33 consecutive years and current attractive dividend yield of 8.99% underscore its commitment to shareholder returns.
The effective date of the transaction is January 1, 2024, with the completion anticipated in 2026, subject to customary conditions, including regulatory approvals and the completion of certain project milestones. Notably, Chevron will advance $100 million to Woodside upon execution of the transaction, refundable if the deal does not complete.
Woodside's acquisition will result in an increase in its interests in the NWS and NWS Oil projects, while Chevron will take over Woodside's non-operated interest in the Wheatstone Project and operated interest in the Julimar-Brunello Project. This change in interests is expected to yield a net increase of 9.6 million barrels of oil equivalent (MMboe) to Woodside's proved plus probable (2P) reserves as of the transaction's effective date.
The NWS Project, which includes the Karratha Gas Plant, recently celebrated 40 years of operations. The Western Australian Government's extension of environmental approval for the project supports its ongoing role in providing reliable energy. The asset swap also aligns with the proposed Browse to North West Shelf Project and improves joint venture planning for decarbonization opportunities at the Karratha Gas Plant.
This announcement, based on a press release statement, contains forward-looking statements regarding the transaction's benefits and future project outcomes, which are subject to inherent risks and uncertainties. The information presented is current as of the date of the press release, and Woodside does not commit to updating the information except as required by law. For deeper insights into Woodside's financial health, valuation metrics, and growth potential, investors can access comprehensive analysis through InvestingPro, which offers detailed Pro Research Reports covering over 1,400 top stocks.
In other recent news, Woodside Energy Group Ltd has made several significant business moves. The company reported a mid-year 2024 net profit after tax of $1.9 billion, a 6% decrease in unit production costs, and a positive free cash flow of $740 million. Woodside Energy also finalized the sale of a 15.1% interest in the Scarborough project to JERA, a Japanese energy company.
In a strategic move, the company completed the acquisition of Tellurian (NYSE:TELL) and OCI Clean Ammonia, although these acquisitions led to a temporary exceedance of the company's target gearing range. Woodside Energy also announced its intention to delist from the London Stock Exchange (LON:LSEG), aiming to streamline operations.
Additionally, the company priced a U.S. bond offer, potentially indicating a strategy to diversify its financing options. On the analyst front, Citi downgraded the company's stock rating from Neutral to Sell and lowered the price target to AUD24.50, citing ongoing concerns around dividend expectations and potential mergers and acquisitions. These are recent developments concerning Woodside Energy Group Ltd.
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