Devon Energy Corp
Shares of Devon climbed about 6 percent after the deal was announced.
Foreign companies like Sinopec, hungry for the know-how to produce oil and gas from shale and other unconventional basins, have invested heavily in North American acreage. Chesapeake Energy
Sinopec International Petroleum Exploration & Production Corp, a unit of Sinopec, will make a $900 million cash payment upon closing of the deal and pay $1.6 billion in the form of a drilling carry.
Devon previously said it was seeking a joint-venture partner to help shoulder the costs of drilling in unconventional basins where wells require the expensive hydraulic fracturing process to produce oil and gas.
Sinopec is investing in 1.2 million acres in Devon's positions in the Tuscaloosa Marine Shale in Alabama and Mississippi, the Niobrara in Colorado, the Mississippian, the Utica Shale in Ohio and the Michigan Basin.
The Sinopec unit had bought a stake in Chevron Corp.'s
Devon expects the entire $1.6 billion designated for drilling costs to be spent by the end of 2014. Through 2012, the companies expect to drill about 125 wells in the five plays.
Devon shares were up $3.74 to $65.74 in early New York Stock Exchange trading.
(Additional reporting by Swetha Gopinath in Bangalore and Matt Daily in New York; Editing by Sriraj Kalluvila and Mark Porter)