Devon Energy Corp. has found another business partner in the Far East.
Devon on Wednesday announced a $1.4 billion joint venture with Japan's Sumitomo Corp., which describes itself as a general trading company operating in a variety of fields. The company in 2009 became the first Asian firm to get involved in the production of natural gas from shale, according to its website.
Sumitomo will acquire 30 percent of Devon's acreage in two oil-rich Permian Basin plays, while paying for the bulk of the Oklahoma City company's drilling costs in west Texas over the next two years.
“This arrangement will materially enhance Devon's future returns and improve our capital efficiency,” Devon CEO John Richels said in a statement. “It will also further enhance our financial strength.”
Sumitomo has an oil field service and supply business, which sells steel tubing to Devon, a Devon spokesman said.
The Sumitomo deal, which involves about 650,000 acres in the Cline and Midland-Wolfcamp shale plays, is Devon's second joint venture this year with an Asian company.
Devon closed a $2.5 billion deal with China's Sinopec International Petroleum Exploration & Production Corp. in April, with Sinopec gaining a stake in five developing U.S. shale plays.
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