After recently splurging US$3.1bn on a JV with Argentinean Bridas Energy (advised by Baker & McKenzie and Akin Gump), China National Offshore Oil Corporation (CNOOC) has made another hefty investment. The oil producer, this time, has agreed to pay US$515m for a 24.5% participation interest in Block 15/34, an area of the South China Sea, from Oklahoma-based Devon Energy. CNOOC was represented by its own in-house legal department.

Block 15/34 is located in the Pearl River Mouth Basin of South China Sea, it includes the Panyu oil field which produces 49,000 barrels of crude a day, The deal will see CNOOC increase its Block 15/34 stake to 75.5%. The other partner ConocoPhillips holds the remaining 24.5% interests.

Devon Energy is a long-standing client of Vinson & Elkins, the firm advised the client on a number of significant upstream exploration and production matters including its US$262m sale of Indonesian oil and gas concession operations to PetroChina in 2002. The firm also negotiated production sharing contracts on behalf of Devon, for several deep water blocks in the South China Sea and one block in the Yellow Sea.

Vinson & Elkins' role as lead counsel to Sinopec in its US$8bn acquisition of Calgary-based Addax Petroleum last year, was recognized at the 2010 ALB China Law Awards, where it clinched the award for "Energy & Resources Deal of the Year." The transaction is still the largest overseas energy acquisition by a Chinese company to date.

*Completion of the transaction is subject to necessary government and regulatory approvals.