Sinopec has decided to enter into a $2.2 billion agreement with Devon Energy which will give it access to shale deposits in the U.S, the news reports said. The Chinese oil company will get a one-third stake in the five new shale projects.
It also expects to drill 125 wells this year. Under the terms of the contract with Devon, Sinopec will pay $900 million in cash and the remaining of the investment will be paid by the end of 2014.
The deal will be worth as much as $2.5 billion when all payments are made. Devon’s Chief Executive and President John Richels said, “This arrangement improves the capital efficiency of Devon by recovering our land and drilling costs to date and by significantly reducing our future capital commitments.”
Meanwhile, the French-based company Total has also announced a $2.3 billion shale deal with Cheasapeake Energy and EnerVest.
Sinopec Ltd is a majority owned of state owned company Sinopec Group. The company’s business includes oil and gas exploration, refining and marketing, production and sales of petrochemicals, storage and pipeline transportation of crude oil and natural gas, refined oil products, petrochemicals and other chemicals. It was set up as a joint stock entity under the China Petrochemical Corporation Group in February 2000.
