The companies said that BP has also agreed to sell Devon a 50% stake in its Kirby oil sands interests in Alberta, Canada, for US$ 500 million and that the two companies would form a venture to develop Kirby.
The deal gives Europe’s second-largest oil company by market value reserves a highly prospective exploration which will help it meet its goal of growing production at 1 to 2 percent per annum in the next decade.
The deal also gives BP the entry into Brazil, which Chief Executive Tony Hayward has long eyed. However, Devon’s assets are in the Campos basin, rather than the Santos basin where most excitement is focused after multi-billion barrel discoveries in recent years.
Devon announced its asset sale program in November, saying it hoped to pull in as much as 7.5 billion USD for its international and Gulf of Mexico assets as it looks to focus on its onshore oil and gas fields in North America.
The company, which felt investors had not ascribed a reasonable value to its Gulf and international assets, has already sold its interest in three deepwater development projects in the Gulf of Mexico for about 1.3 billion.
The companies did not put a figure on the reserves that BP was buying but Colin Smith at ICAP estimated that BP has bought 140 million barrels of oil equivalent (boe) of booked reserves. However, a BP spokesman said the deal was largely predicated on the exploration upside the fields offer.
BP is also buying around 240 leases in the Gulf of Mexico, including Devon’s 30% interest in the major Kaskida discovery, in which BP already has a 70% stake. BP is also adding to its existing interest in the Azeri-Chirag-Gunashli oilfield off the coast of Azerbaijan.
Devon’s 5.63% stake will increase BP’s interest in ACG, which produces 820,000 barrels of oil a day, to 39.77%.