Participation in Tight Oil Development Project in Texas, USA

Sumitomo Corporation (SC) has announced that it has signed an agreement with Devon Energy Corporation (Devon) to participate in Devon's tight oil development project in the Permian Basin ("the Project").

<Summary of the Project >

<SC portion of the Project>

SC has agreed to invest in the non-operated interests of the Project, including leases, existing wells, and facilities. SC will make a cash payment equivalent to 25% of consideration upon closing, and will also pay the rest of the consideration in the form of a drilling carry. SC plans to invest approximately US$2.0 billion including the consideration and drilling carry over a three year period. SC and Devon will jointly develop three target formations in the co-development area in the Permian Basin. SC is considering financing arrangements mainly from Japan Bank for International Corporation (JBIC).

The Permian Basin has been a prolific producing area since the 1920s as a conventional development field. It has the largest proven oil reserves in North America (approximately 5 billion barrels), by far exceeding those of Alaska and the Gulf of Mexico. The development area for the Project, located in the eastern area of the Permian Basin, is expected to have enormous resources from the long history of drilling activities. In addition to our three target formations, many other formations are proven to hold hydrocarbons in the development area and therefore, we expect incremental reserves through future development.

In December 2009, SC, as the first Asian company to join a shale gas project in the United States, decided to participate in the shale gas development project in the Barnett Shale Fields, in Texas. The following year in September, SC also participated in the Marcellus Shale Fields in Pennsylvania. As the next step, SC decided to participate to the Project which is a large-scale tight oil development project with Devon, one of the leading companies in Shale gas/Tight Oil business. This participation in the Project will enable SC to become one of the largest Japanese acreage - holders in the United States.
Leveraging SC's integrated corporate strength, SC is planning to expand business in the fast growing unconventional energy industry with multidimensional approaches, such as a global development of shale gas and tight oil development projects, crude oil/natural gas trade business within the United States, petrochemical business, steel pipe business, and other associated business.

<Profile of Devon Energy Corporation> Devon (NYSE: DVN) is an independent Oil & Gas E&P company based in Oklahoma. Through an acquisition of Mitchell Energy in 2002, a pioneer in shale development, Devon highly contributed to the industry as a leading company for improving drilling technologies and efficiency of shale gas development in North America. In 2010, Devon sold all of its assets other than those in North America in order to concentrate its resources on onshore development. Devon is the largest natural gas producer in the Barnett Shale Fields and also has huge acreage in the Cana Woodford Shale Fields, the Permian Basin and other projects in the United States.

<<Reference Information>>

(1) Summary of Tight Oil Development
Tight Oil projects involve the extraction of crude oil from shale, limestone and sandstone formations with low-permeability that are classified as source rock (sedimentary rock with petroleum hydrocarbon production capacity) using the same horizontal drilling and hydraulic fracturing technologies used in shale gas development.

(2) Summary of Permian Basin
The Permian Basin is an area in the southwestern United States that extends over the states of Texas and New Mexico. This area of approximately 230,000 square kilometers spreads over 52 counties. It has proven oil reserves that far exceed those of Alaska or the Gulf of Mexico; crude oil production in the Permian Basin accounts for approximately 20% of the total in the United States. After the horizontal drilling and hydraulic fracturing technologies used in the production of shale gas were introduced in the Permian Basin in 2004, many companies participated in the development of these areas. Approximately 500 rigs, nearly the same as the peak number seen in the 1970s, are now being operated in the area towards the development of crude oil and natural gas. The Project targets three oil-bearing formations in the east-side of the Permian Basin: Wolfcamp Shale; Cline Shale; and Mississippian Lime.

(Source: U.S. Energy Information Administration, National Atlas. Some parts are prepared by Sumitomo Corporation.)