BP buys Devon assets for $7 billion

Oil giant BP has announced it will pay Oklahoma firm Devon Energy $7 billion for its assets in a deal that will allow the UK firm to begin exploring off the coast of Brazil.  BP will purchase DevonÔÇÖs Brazilian assets, 240 leases in deepwater sites in the Gulf of Mexico and a small stake in an oil field in the Azerbaijani sector of the Caspian Sea. Under the terms of the agreement, BP will receive 10 exploration blocks in BrazilÔÇÖs Campos and Camamu-Almada basins, in water depths from 100 metres to 2,780 metres. The deal will also reinforce BP's dominant position in the Gulf of MexicoÔÇöthe company is already the largest producer in the region, with a daily production capacity of around 500,000 barrels. Last year, it discovered the giant Tiber oil field, following drilling of the world's deepest discovery well at over 35,000 feet. The agreement with Devon underlines the growing trend by the oil majors to explore in deepwater as winning the rights to other, more accessible oil reserves in places like the Middle East becomes increasingly difficult. BP will be selling Devon half its stake in its Kirby oil sands in Alberta, Canada, for $500 million as part of the deal. Devon, a mid-sized Oklahoma City-based company, doesn't have the financial resources to develop all of its assets, so has decided to concentrate on its onshore projects in North America. Offshore projects are especially problematic for companies like Devon as they take years to start generating revenue. Devon produces both conventional and heavy oil in Canada, and also has shale gas properties in the Horn River Basin of north-east British Columbia. The company pioneered the development of the Barnett Shale, the Texas gas field that led to the recent natural gas drilling boom. It has 1.5 million acres in the Gulf of Mexico, most of it undeveloped. In December, AP Moller-Maersk, the Danish shipping and oil group, bought Devon's stake in the Jack oil field in the Gulf of Mexico for $300 million. Statoil of Norway is also taking a keen interest in the region, buying DevonÔÇÖs stake in the St Malo project. Devon sold off its African assets in 2007 and 2009. Other bidders competing with BP for the assets included China National Offshore Oil Corp., Galp of Portugal and oil majors such as Chevron, ExxonMobil and Royal Dutch Shell. Brazil is home to some of the world's largest deepwater oil fields, including the huge Tupi field, the biggest oil find in the Western hemisphere since 1976. Tupi is estimated to contain recoverable reserves of between five billion and eight billion barrels of oil. Neither BP nor Devon have yet made any comment on the deal.