Chevron Corporation (NYSE:CVX) and Woodside Energy Group Limited (NYSE:WDS) finalized an asset swap deal on Wednesday.

What Happened: Woodside will transfer its 13% non-operated interest in the Wheatstone Project and its 65% operated interest in the Julimar-Brunello Project in Western Australia.

In return, Woodside will acquire Chevron's 16.67% stakes in the North West Shelf Project and the NWS Oil Project, along with a 20% interest in the Angel Carbon Capture and Storage Project.

Additionally, Chevron will make a cash payment to Woodside of up to $400 million. This includes a $300 million payment at completion, and contingency payments of up to $100 million, tied to the handover of the Julimar Phase 3 Project and subsequent production performance.

Additionally, cashflows of around $400 million are forecasted from utilizing depreciable tax bases upon completion.

Chevron will also provide Woodside with a $100 million advance payment upon execution of the transaction, which is refundable by Woodside if the transaction is not complete.

The transaction is expected to close in 2026 since it is contingent upon the completion of the Julimar Phase 3 Project execution and handover.

Why It Matters: The Julimar Phase 3 Project is currently in the execution phase. Woodside will continue to manage it until the asset is transferred to Chevron at the project start-up.

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. 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 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."

"This transaction creates greater opportunity to fill emerging processing capacity and maximise value accretive recovery from the North West Shelf Project."

"Additionally, this improves joint venture planning for decarbonization 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."

Price Action: Chevron shares rose 0.29% at $144.50, while WDS shares are up 1.53% at $14.60 premarket on Thursday.

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