Sinopec to pay $2.2bn for part of Devon’s US shale gas interests

03 January 2012 17:30  [Source: ICIS news]

HOUSTON (ICIS)--Chinese energy and petrochemicals major Sinopec has agreed to pay $2.2bn (€1.7bn) to acquire one-third of the interest of Devon Energy in five US shale gas assets, the companies said in separate statements on Tuesday.

The assets are Niobrara, Mississippian, Utica Ohio, Utica Michigan and Tuscaloosa.

Devon CEO John Richels said the deal with Sinopec would improve Devon’s capital efficiency by recovering land and drilling costs it had incurred to date, and by significantly reducing its future capital commitments.

“We can accelerate the de-risking and commercialisation of these five plays without diverting capital from our core development projects,” Richels added.

Devon will be the operator of the assets and it will be responsible for commercially marketing production on the North American market.

The companies expect to close the deal in the first quarter of 2012, subject to regulatory approvals.

For Sinopec, the deal marks its entry into the upstream US oil and gas sector, it said.

The Chinese firm is already active in Canada's upstream oil and gas sector. Last year, Sinopec acquiredCanadian natural gas producer, and in 2010 it took a stake in a Canadian oil sands firm.

In related news on Tuesday, French energy and petrochemicals major Total said it had acquired an interest in shale gas assets in Ohio from US firms Chesapeake and EnerVest.

($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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