Sinopec invests $2.2 billion in Devon Energy 5 new venture plays

Sinopec invests $2.2 billion in Devon Energy for 5 new venture plays

9:51 PM, 9th January 2012
Sinopec invests $2.2 billion in Devon Energy for 5 new venture plays
John Richels, President and CEO, Devon Energy.

OKLAHOMA CITY, US: Sinopec International Petroleum Exploration & Production Corporation (SIPC) has agreed with Devon Energy Corporation, for it to invest $2.2 billion in exchange for one-third of Devon’s interest in five new venture plays. SIPC will also reimburse Devon for the drilling costs. SIPC will make a $900 million cash payment upon closing and $1.6 billion paid in the form of a drilling carry. Based on the current work plan, the company expects the entire $1.6 billion carry to be realized by end of 2014. Subject to approvals, the deal closing is expected in first quarter of 2012.

“This arrangement improves Devon’s capital efficiency by recovering our land and drilling costs to date and by significantly reducing our future capital commitments. We can accelerate derisking and commercialization of these five plays without diverting capital from our core development projects,” said John Richels, President and CEO, Devon Energy.

The deal includes positions across five shale regions: the Tuscaloosa Marine Shale, the Niobrara, the Mississippian, Ohio Utica Shale and the Michigan Basin. Through 2012, the companies expect to drill approximately 125 gross wells in the five plays and Devon will serve as the operator.

Recently, the French oil major, Total SA purchased a minority stake Ohio shale discovery of Chesapeake Energy and EnerVest for $2.32 billion. Both these deal are strong indications of growing interest of foreign companies’ eyeing the US oil-and-gas assets.

(C) WOC News

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