BP to pay Devon $7 bln for fields

BP said on Thursday that it will pick up interests in 10 exploration blocks in Brazil, Devon's stake in the Kakskida discovery in the Gulf of Mexico, a portfolio of deepwater exploration acreage in the Gulf of Mexico, and Devon's stake in the BP-operated Azeri-Chirag-Gunashli (ACG) development in Azerbaijan.

BP has also agreed to sell Devon a 50 percent stake in its Kirby oil sands interests in Alberta, Canada, for $500 million and that the two companies would form a venture to develop Kirby.

The deal gives BP reserves and highly prospective exploration, mainly in the deep water offshore where it is an industry leader.

It follows a planned $4 billion deal by Exxon Mobil announced last year to buy a stake in an oilfield offshore Ghana as well as a $3 billion bid earlier this week by Royal Dutch Shell and PetroChina <0857.HK> for Australia's Arrow Energy .

"This is an indication of the lack of exploration that the major companies have been doing in recent years in that they are now out buying assets," James Halloran, energy consultant at Financial America Securities, said. "They are letting someone else break the position open for them and they are going in and buying them on the open market."

Analysts said the new fields will not significantly contribute to BP's production until after 2015, and they will help the company meet its goal of growing production at 1 to 2 percent per annum in the long term.

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 focussed after multi-billion-barrel discoveries in recent years.

BP shares were barely moved by the deal, off 0.3 percent against a 0.1 percent drop in the STOXX Europe 600 Oil and Gas index <.SXEP> at 1327 GMT. Devon shares closed up 0.5 percent or 32 cents to end the day's trade at $72.01 in morning trading on the New York Stock Exchange.