The investment is the first in North America by Kuwait Foreign Petroleum Exploration, a subsidiary of Kuwait Petroleum Corp.
"This project will provide diversified, material, long-life reserves, production and upside in a low-risk business environment, with strong and stable cash flows for decades to come," KUFPEC chief executive Shaikh Nawaf Saud Nasir Al-Sabah said in a statement.
Chevron Canada, a division of the California-based energy giant, will hold a 70 per cent interest in the joint venture and will remain the operator of the project, which spans more than 133,000 hectares.
Chevron said Monday the deal creates a partnership for the appraisal and development of the project in the Kaybob area of the Duvernay, about 200 kilometres northwest of Edmonton.
"This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy," said Jay Johnson, Chevron's senior vice-president.
"The transaction provides us an expanded relationship with a valued partner. It also recognizes the outstanding asset base we have assembled."
The price includes the amount paid at closing as well as a portion of Chevron Canada's share of the joint venture's future capital costs.
The deal is expected to close in November.
Chevron has drilled 16 wells since it started its exploration program in the region.
Chevron wasn't the only company looking for a partner to help develop its Duvernay lands; Athabasca Oil Corp. (TSX:ATH) and Talisman Energy Corp. (TSX:TLM) have both been shopping around for a joint-venture deal.