BP to buy exploration rights in Brazil, Azerbaijan, Gulf of Mexico from Devon Energy for $7B

LONDON - Oil company BP PLC said Thursday it will pay $7 billion to acquire exploration rights in Brazil, Azerbaijan and the Gulf of Mexico from Devon Energy Corp.

BP said it is also selling, for $500 million, a 50 per cent stake in its Kirby oil sands interests in Canada to Devon, based in Oklahoma City, Oklahoma.

BP will buy the rights for 10 offshore exploration blocks in Brazil and a portfolio of rights in the U.S. Gulf of Mexico and in the Caspian Sea.

Devon is repositioning itself to concentrate on its North American onshore natural gas and oil portfolio.

BP is the largest leaseholder in the Gulf of Mexico with more than 650 blocks producing about 400,000 barrels of oil equivalent daily. Devon has interests in more than 450 offshore blocks in the Gulf that account for about 7 per cent of Devon's total oil and natural gas production.

In Brazil Devon has interests in 10 offshore blocks covering 1.4 million acres. It has been working with Brazilian oil company Petrobras on five of the blocks. BP completed exploration of two deep-water blocks off Brazil in 2004.

"These sales, combined with our previously announced divestitures of $1.3 billion of deep water Gulf of Mexico assets, put Devon well on the way to completing its strategic repositioning," said Larry Nichols, Devon's chairman and CEO.

"Given any reasonable sales price for Devon's remaining divestiture assets, the transactions to date suggest that our total after-tax proceeds for the entire divestiture program will exceed our previously announced range of $4.5 to $7.5 billion."