Devon announces deal with Chinese

Tuesday, November 29th 2005, 9:40 am
By: News On 6

OKLAHOMA CITY (AP) _ Devon Energy Corp. announced Tuesday it has signed a production sharing contract with the Chinese National Offshore Oil Corporation for an offshore oil field.

The field, between about 650 feet and 6,500 feet deep, covers about 2,700 square miles of Baiyun Sag at the mouth of Pearl River in the eastern South China Sea.

Under the terms of the deal, Oklahoma City-based Devon will conduct a seismic survey and wildcat drilling during the exploration period and will shoulder all the costs of the exploration. CNOOC retains the right to participate in up to a 51 percent interest if a commercial discovery is made in the field.

CNOOC, which is controlled by the government of China, recently tried to buy California-based Unocal Corp. but dropped the bid following opposition from U.S. politicians. The company said the contract with Devon is its fourth deepwater pact with a foreign partner.

Separately, Devon said it also holds a roughly 25 percent working interest in another field in the Pearl River basin, where three oil discoveries have been made since 1998. The company said these discoveries resulted in the so-called Panyu project, which has produced 50 million barrels of oil since production began in 2003.

In 2000, Devon merged with the Santa Fe Snyder Corp., which had discovered oil in this area.

``Our fast-track success at Panyu and an outstanding working relationship with CNOOC encourages us to pursue other offshore opportunities in China,'' said Stephen J. Hadden, senior vice president, exploration and production for Devon.

Meanwhile, Devon on Tuesday revised estimates for its proven oil reserves to 410 million to 420 million barrels. The company's previous estimate was 350 million to 390 million barrels.