OKLAHOMA CITY--(BUSINESS WIRE)--Jan. 3, 2012--
Devon Energy Corporation (NYSE:DVN) today announced it has signed an
agreement with Sinopec International Petroleum Exploration & Production
Corporation (SIPC) whereby SIPC will invest $2.2 billion in exchange for
one-third of Devon’s interest in five new venture plays. 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 companies
have recently added acreage in the Ohio Utica Shale, increasing their
joint position in the play to 235,000 net acres.
SIPC will also 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 cash
payment upon closing and $1.6 billion 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, the company expects the entire $1.6 billion carry to be realized
by year-end 2014. Through 2012, the companies expect to drill
approximately 125 gross wells in the five plays.
“This arrangement improves Devon’s capital efficiency by recovering our
land and drilling costs to date and by significantly reducing our future
capital commitments,” said
John Richels
, Devon’s president and chief
executive officer. “We can accelerate the derisking and
commercialization of these five plays without diverting capital from our
core development projects. This transaction also provides us further
flexibility to seek exposure to additional new play types with less
risk.”
“While we are still in the early stages of derisking these plays, the
tremendous response by industry to our data room process clearly
underscores the attractiveness of this opportunity,” said
Dave Hager
,
Devon’s executive vice president of exploration and production. “We
believe our strong acreage positions in these plays, our reputation as a
quality operator and the uniqueness of the opportunity for exposure to
five different plays in a single venture make this a compelling value
proposition.”
Devon will serve as the operator and will have ultimate responsibility
for the allocation of capital. The company is also responsible for
commercially marketing all production from these plays into the North
American market. Subject to customary government and regulatory
approvals, the closing is expected to occur in the first quarter of 2012.
Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is a
leading U.S.-based independent oil and gas producer and is included in
the S&P 500 Index. For additional information, visit www.devonenergy.com.
This press release includes "forward-looking statements" as defined
by the Securities and Exchange Commission. Such statements are those
concerning strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that the company expects, believes or anticipates will or
may occur in the future are forward-looking statements. Such statements
are subject to a number of assumptions, risks and uncertainties, many of
which are beyond the control of the company. These risks include, but
are not limited to the volatility of oil, natural gas and NGL prices;
political, economic or public policy changes; uncertainties inherent in
estimating oil, natural gas and NGL reserves; drilling risks; and
environmental risks. Investors are cautioned that any such statements
are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. The forward-looking statements in this press
release are made as of the date of this press release, even if
subsequently made available by Devon on its website or otherwise. Devon
does not undertake any obligation to update the forward-looking
statements as a result of new information, future events or otherwise.
Source: Devon Energy Corporation
Devon Energy Corporation
Investor Contact
Shea Snyder,
405-552-4782
or
Media Contact
Chip Minty, 405-228-8647