By Adwitiya Srivastava

(Reuters) -Australia's Woodside Energy said on Thursday it had entered into a deal with Chevron to exchange stakes in a number of energy projects, with the U.S. oil and gas giant making a cash payment of up to $400 million to Woodside.

Under the terms of the deal, Woodside will acquire Chevron's 16.67% stake in the North West Shelf (NWS) Project, the NWS Oil Project and its 20% stake in the Angel Carbon Capture and Storage Project, all located in Western Australia.

On the other hand, Woodside will transfer its 13% non-operated interest in the Wheatstone and its 65% operated interest in Julimar-Brunello Projects to Chevron.

The deal comes a few days after Woodside Energy received environmental approval from the Western Australian state to prolong the North West Shelf liquefied natural gas project until 2070.

"This transaction simplifies our portfolio, improving our focus and efficiency by consolidating our position in our operated LNG assets," said Woodside CEO Meg O'Neill.

Apart from the rationale to streamline Woodside's Australian portfolio, focusing on its operated LNG assets and simplifying NWS joint venture ownership, the company's increased stake in the Angel CCS Project also promotes the future development of this large-scale, multi-user carbon capture and storage hub in Western Australia, Woodside said.

"The asset exchange will suit both companies' interest for future development," said Brad Smoling, managing director at Smoling Stockbroking.

"Focusing on some assets in their own respective backyards makes good common sense in these fluid times in the energy sector."

The deal, which is expected to close in 2026, marks a significant shift in the energy landscape, with both companies reshaping their portfolios amid the global transition to cleaner energy sources.

Shares of Woodside, however, fell about 2.3% to hit their lowest level since Jan. 11, 2022, by 1235 GMT.