Sinopec Group, China's largest oil refiner, announced Tuesday one of its subsidiary has agreed to buy from Oklahoma-headquartered Devon Energy Corporation one-third of its interest in five new venture plays in the United States with a consideration of 2.2 billion U.S. dollars.
Sinopec Group announced Tuesday one of its subsidiary has agreed to buy from Oklahoma-headquartered Devon Energy Corporation one-third of its interest in five new venture plays in the United States with a consideration of US$2.2 billion.
The Sinopec International Petroleum Exploration & Production Corporation (SIPC), one of the Chinese refiner giant's subsidiary, will acquire one-third of Devon's interest in Niobrara, Mississippian, Utica Ohio, Utica Michigan and Tuscaloosa, according to an agreement between the two companies.
Prior to this transaction, Devon had assembled 1.2 million net acres in the company's previously announced positions in the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio Utica Shale and the Michigan Basin.
The SIPC and Devon have recently added acreage in the Ohio Utica Shale, increasing their joint position in the play to 235,000 net acres.
SIPC will reimburse Devon for drilling costs incurred prior to closing and acreage acquisition costs incurred subsequent to the effective date of the agreement.
SIPC will make a 900 million-U.S.-dollar cash payment upon closing and 1.6 billion U,S. dollars paid in the form of a drilling carry. The drilling carry will fund 70 percent of Devon's capital requirements, which results in SIPC paying 80 percent of the overall development costs during the carry period.
Based on the current work plan, Devon expects the entire 1.6 billion-U.S.-dollar carry to be realized by the end of 2014.
Through 2012, SIPC and Devon expect to drill about 125 gross wells in the five plays, according to the agreement.