Money Matters, Simplified.
BP to buy $7bn assets from Devon
by Ishita Sood - March 11, 2010 - comments
A BP spokesman said that BP is buying around 240 leases in the Gulf of Mexico, including Devon's 30 percent interest in Kaskida discovery. BP already has 70 percent stake in the same.
BP Plc, Europe’s largest oil company, will buy Brazilian, Azeri, and Gulf of Mexico assets from Devon Energy for a total cost of $7 billion, the company announced Thursday.
The deal will give BP an entry into the Brazilian market, according to BP Chief Executive Tony Hayward.
“This strategic opportunity fits well with BP’s operating strengths and key interests around the world. As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets,” he said.
The London-based firm will be selling Devon a 50 percent stake in Kirby oil sand interests. The sand interests, located in Canada, are to the tune of $500 million.
The deal
The new deal will add more than 100,000 barrels a day in BP’s kitty, according to Jason Kenney, head of oil and gas research in ING Commercial Banking.
Devon on Thursday said it was selling all its offshore and non-North American assets to concentrate only on U.S. and Canada drilling.
“This is one of the best deals BP has ever made,” Kenney said. “Brazil was missing from BP’s portfolio, and the assets are all high-margin barrels.”
“This basically covers what they lacked the most in their portfolio. Brazil was the single type of asset play they lacked the most and they also increase their footprint in deepwater oil in the Gulf of Mexico,” said Gudmund Halle Isfeldt, an Oslo-based analyst at DnB NOR ASA.
A BP spokesman said that BP is buying around 240 leases in the Gulf of Mexico, including Devon's 30 percent interest in Kaskida discovery. BP already has 70 percent stake in the same.
BP will also buy interests in the Zia, Magnolia, Merganser and Nansen fields. The company’s shares fell by 0.7 percent on Thursday.
Devon to concentrate on US, Canada drilling
Devon on Thursday said it was selling all its offshore and non-North American assets to concentrate only on U.S. and Canada drilling.
Devons’s deep water drilling-rig contracts, which are worth $1.1 billion, will also go to BP after this deal.
“These sales, combined with our previously announced divestitures of $1.3 billion of deepwater Gulf of Mexico assets, put Devon well on the way to completing its strategic repositioning,” said Larry Nichols, Devon's chairman and chief executive officer.