BP to buy assets from Devon Energy for $7 billion

By OGJ editors
HOUSTON, Mar. 11 -- BP PLC announced plans to buy Devon Energy Corp.’s assets in the deepwater Gulf of Mexico, Brazil, and Azerbaijan for $7 billion.

In Brazil, BP is gaining access to deepwater exploration in eight blocks in the Campos and Camumu-Almada basins as well as two onshore licenses in the Parnaiba basin.

In Azerbaijan, BP is acquiring Devon’s 5.63% stake in the BP-operated Azeri-Chirag-Gunashli development to bring BP’s interest in the fields to 39.77%.

Devon expects closings on the various assets at different times before yearend. Closings are subject to customary closing conditions and regulatory approvals.

Tony Hayward, BP group chief executive officer, said the transaction brings BP “significant additional long-term growth potential with an emphasis on high-margin oil.”

Andy Inglis, BP chief executive of exploration and production, said BP is gaining a major position in Brazil’s deepwater. The deepwater exploration acreages include assets in 330-9,100 ft of water.

In addition, BP and Devon agreed to form a heavy oil joint venture to develop BP’s Kirby oil sands leases in Alberta.

To set up the oil sands joint venture, Devon will acquire 50% of BP's interest in the Kirby oil sands leases. Devon will pay BP $500 million and commit to fund an additional $150 million of capital costs on BP's behalf.

Devon agreed to operate the Kirby project, which is expected to be a multistage steam-assisted gravity drainage project.

BP and Devon plan to negotiate a long-term heavy crude sales agreement for Devon's share of Kirby production.