Devon Energy Corp. (NYSE: DVN) announced the closing of its previously announced $1.4 billion joint venture agreement with Sumitomo Corp. 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% 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% of Devon’s capital requirements, resulting in Sumitomo paying 79% 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.