Devon, Sinopec Sign Deal for Shale Gas Development (DVN, CHK, TOT)

Independent oil & gas producer Devon Energy Corp. (NYSE: DVN) today announced an agreement with a subsidiary of China’s Sinopec which will give the Chinese firm a 33% stake in five of Devon’s shale gas plays. The deal is worth $2.2 billion, $900 in cash to Devon and $1.6 million in development carry costs.

Here’s how the deal will pay out, according to the Devon press release:

The drilling carry will fund 70 percent of Devon’s capital requirements, which results in [Sinopec] paying 80 percent of the overall development costs during the carry period. Based on the current work plan, the company expects the entire $1.6 billion carry to be realized by year-end 2014. Through 2012, the companies expect to drill approximately 125 gross wells in the five plays.

The deal is similar to one announced earlier today between Chesapeake Energy Corp. (NYSE: CHK) and France’s Total SA (NYSE: TOT) valued at $2.3 billion. The Devon-Sinopec deal is expected to close in the first quarter.