Devon Energy Corp. said on Tuesday China's Sinopec will invest $2.2 billion for a third of the U.S. oil and natural gas producer's interest in five developing fields as part of a long-term partnership.
Shares of Devon climbed about 6 percent after the deal was announced.
Foreign companies like Sinopec, hungry for the know-how to produce oil and gas from shale and other unconventional basins, have invested heavily in North American acreage. Chesapeake Energy announced a similar $2.3 billion deal on Tuesday with French oil company Total SA.
Sinopec International Petroleum Exploration & Production Corp, a unit of Sinopec, will make a $900 million cash payment upon closing of the deal and pay $1.6 billion in the form of a drilling carry.
Devon previously said it was seeking a joint-venture partner to help shoulder the costs of drilling in unconventional basins where wells require the expensive hydraulic fracturing process to produce oil and gas.
Sinopec is investing in 1.2 million acres in Devon's positions in the Tuscaloosa Marine Shale in Alabama and Mississippi, the Niobrara in Colorado, the Mississippian, the Utica Shale in Ohio and the Michigan Basin.
The Sinopec unit had bought a stake in Chevron Corp.'s deepwater Indonesian project in October for $680 million. This added to the spate of deals done by the Sinopec Group last year that also included an increased stake in an Australian LNG joint venture, a $3.5 billion deal to buy into a Brazilian oil services group, and the $2.1 billion acquisition of Canada's Daylight Energy Ltd.
Devon expects the entire $1.6 billion designated for drilling costs to be spent by the end of 2014. Through 2012, the companies expect to drill about 125 wells in the five plays.
Devon shares were up $3.74 to $65.74 in early New York Stock Exchange trading.
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