"I'm really pleased. The paperwork has to be done but the agreement is there," the Spaniard told Sky Sports television after the European champions beat Arsenal 2-1 at a snowy Stamford Bridge.
"We are happy and he is happy"
Media reported that the 32-year-old, who had been linked in speculation with Real Madrid and Paris St Germain, would sign a one-year extension in the next few days.
Cole has been a regular fan favourite at Chelsea since he joined from Arsenal in 2006, winning the Champions League, a league title and four FA Cups with the west London club.
(Reporting by Alan Baldwin, editing by Pritha Sarkar)