Devon Energy Corporation (NYSE:DVN) today announced the closing of its previously announced $1.4 billion joint venture agreement with Sumitomo Corporation. The joint venture covers approximately 650,000 net acres in the Cline Shale and the Midland-Wolfcamp Shale. Sumitomo will invest $1.4 billion in exchange for 30 percent of Devon’s interest in these projects.
At closing, Sumitomo invested $410 million in cash, composed of the initial cash contribution and Sumitomo’s share of costs since the effective date of the transaction. The remaining $980 million will be invested in the form of a drilling carry. The drilling carry will fund 70 percent of Devon’s capital requirements, resulting in Sumitomo paying 79 percent of the overall drilling and completion costs during the carry period. Devon will serve as operator and expects the entire drilling carry to be realized by mid-2014.
“With the close of the Sumitomo transaction, we have now successfully entered two exploration joint ventures during 2012, approaching $4 billion in value to our company,” said John Richels, Devon’s president and chief executive officer. “These arrangements significantly improve the capital efficiency of our exploration programs which preserves cash flow for our deep inventory of development projects.”
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.