China’s Sinopec International Petroleum Exploration & Production Corp. (SIPC) is investing $2.2 billion with Devon Energy Corp. in exchange for one-third of Devon’s interest in five new venture plays, the Oklahoma City-based independent said Tuesday.

The area of mutual interest is to cover a portion of Devon’s 1.2 million net acres in the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio’s Utica Shale and the Michigan Basin. The companies recently added acreage in Ohio, increasing their joint position in the play to 235,000 net acres.

“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 Devon’s Dave Hager, 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.”

SIPC is to pay Devon $900 million in cash when the transaction closes and $1.6 billion in the form of a drilling carry, which would fund 70% of Devon’s capital requirements and result in SIPC paying 80% of the overall development costs during the carry period. Based on the current work plan, Devon expects the entire $1.6 billion carry to be realized by the end of 2014. Through 2012 the companies expect to drill about 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 Devon CEO John Richels. “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.”

Devon is to serve as the operator and said it would have “ultimate responsibility” to allocate capital. The company also would be responsible for marketing all production from the plays into the North American market. Subject to approvals, closing is expected before the end of March.

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