I posted earlier about Devon's JV with Sumitomo - where Sumitomo paid up big time.
Now what you don't read quite as often is this
http://www.bloomberg.com/news/artic...-loss-shows-shale-isn-t-booming-for-everybody
And this article written back in Oct'14 when oil was in the $70s still
Joint Venture
Sumitomo’s joint venture with Devon covered a swath of the Midland Basin in the Permian’s eastern portion. Sumitomo paid $340 million in cash and agreed to foot the bill for most of Devon’s drilling costs up to $1.025 billion. At the time, Devon had drilled only a handful of horizontal wells in the area at a cost of as much as $6.5 million each, company records show.
Devon estimated that its share of the oil and natural gas in that acreage was the equivalent of 3 billion barrels of crude, according to company investor presentations. With Sumitomo’s stake at 30 percent, its potential was the equivalent of about 1.3 billion barrels. Both Sumitomo and Devon declined to comment on that estimate.
However promising it looked to Sumitomo in August 2012, Devon had yet to deliver. Devon’s estimate of 3 billion barrels of “resource potential” dwarfed the proved reserves of 200 million barrels it reported to the SEC under the regulator’s tighter rules. And the lower number included Devon’s interests in all of the Permian Basin, some of which didn’t involve Sumitomo.
In May 2013, eight months after Sumitomo’s investment, David Hager, Devon’s executive vice president of exploration and production, told investors at the UBS Global Oil & Gas Conference that a portion of the joint venture, an area called the Cline, had faults that made drilling difficult.
Mixed Results
“The results that we’ve seen so far are very mixed, I would say,” Hager said.
Some wells pumped as much as 800 barrels a day in their first month, Hager said in a May 2013 earnings call. Others pumped less than 50 barrels a day, not enough for Sumitomo to cover its share of the investment in wells that cost $6 million each.
“As a responsible operator, Devon continually manages and evaluates its entire portfolio of assets to ensure optimal results,” Devon said in the Sept. 30 statement. John Porretto, a spokesman for Devon, declined to comment further.
Devon is having better luck on the western edge of the Permian in the Delaware Basin, and is steering most of its resources there, company records show. Sumitomo owns no share of that acreage.
“Even if the technology seems like it can do it, the geology turns out to be very complicated,” Takahata said at the Sept. 29 briefing. “A big issue now is how to be able to see beforehand what risks lie below ground.”
