BP receives final approval to buy 10 exploration, production blocks in Brazil -- eight offshore, two onshore -- from U.S.-based Devon Energy for US$3.2B

Yohana Valdez

LONDON , May 10, 2011 (press release) – BP today announced it has received final approval to complete the purchase of ten exploration and production blocks in Brazil from Devon Energy.

The regulatory approvals from the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP) were the last required to conclude the agreement announced in March last year. It is expected formal completion of the acquisition will take place shortly.

The blocks acquired will give BP a diverse and broad deepwater exploration acreage position offshore Brazil with interests in eight licence blocks in the Campos and Camamu-Almada basins in water depths ranging from 330 to 9,100 feet (100-2,780 metres), as well as two onshore licences in the Parnaiba basin. The Campos basin blocks include four discoveries – Xerelete, pre-salt Wahoo, Itaipu and Fragata – and the Polvo field, which is currently producing around 25,000 barrels of oil per day.

“We are pleased to receive the approvals. The completion of this acquisition delivers a material position in some of Brazil’s most important hydrocarbon basins and reinforces the group’s strategy of securing strong exploration positions in such basins and working with strong national champions,” said BP group chief executive Bob Dudley. “We believe these blocks add distinctive value to our asset base, and offer significant long-term growth potential.”
"It is exciting to participate in the development of the oil industry in such an important country as Brazil and the Devon acquisition provides us with an excellent growth platform," said Guillermo Quintero, BP Brazil Regional President.

Last month BP completed the acquisition of the majority control of Brazilian producer of ethanol and sugar Companhia Nacional de Açúcar e Álcool (CNAA). BP paid approximately $ 680 million to acquire 83% of the shares and refinance 100% of the company’s long-term debt. BP will now be responsible for operating two ethanol plants located in Ituiutaba (Minas Gerais) and Itumbiara (Goias), with current capacity of processing 5 million tons of sugar cane per year.
Notes to editors:

* The blocks are part of the transaction between BP and Devon Energy announced in March 2010. Most of Devon’s employees in Brazil are expected to join BP.
* The transaction is a corporate share sale whereby BP will obtain ownership of Devon Energy do Brasil Ltda., the Devon entity that owns interests in the blocks.
* The acquisition gives BP interests in one currently-producing field (Polvo) and 4 existing discoveries (Xerelete, Itaipu, Wahoo and Fragata).
* BP becomes operator of the Polvo field, and of blocks BM-C-32 (containing the Itaipu discovery) and BM-C-34 (consisting of C-M-471 and C-M-473, and containing the Fragata discovery) in the Campos Basin; Block BM-CAL-13 in the Camamu-Almada Basin; and onshore Block BT-PN-2 in the Parnaiba Basin.
* BP also gains non-operating interests in blocks BM-C-30 (containing the Wahoo discovery), BM-C-35 and the Xerelete discovery (formerly the BC-2 block), all in the Campos Basin; as well as onshore Block BT-PN-3 in Parnaiba Basin.

Details and map of blocks:
Download details of the blocks including map (pdf, 136KB)
BP in Brazil:

* BP’s return to E&P operations in Brazil adds to the investments already being made by other BP Group companies in Brazil, in the area of biofuels, lubricants and aviation fuels, highlighting the strategic importance of Brazil for BP.
* BP companies are now present in nine Brazilian states and the Federal District.
* Castrol, BP’s lubricants business, established its lubricants plant in Rio de Janeiro in 1957, from where it manufactures a wide variety of lubricants for engines and industrial equipment.
* Air BP, the BP Group aviation fuel unit, began its operations in Brazil in 2002. It currently supplies aviation fuel at 13 airports in five Brazilian states and the Federal District.
* BP Biofuels has operated in Brazil since 2008, through its 50% subsidiary Tropical Bioenergia, being the first oil company to produce ethanol in Brazil. It announced in March 2011 an agreement to acquire a controlling stake in CNAA (Companhia Nacional de Açúcar e Álcool), further expanding its presence in Brazil.
* Prior to the Devon acquisition, BP carried out exploration activities in the country during the risk contract phase in the 1970s and 1980s, as well as under the concession regime from 1999 to 2005 in the Foz do Amazonas Basin. BP acquired seismic data in the Santos, Amazonas, Paraná and Foz do Amazonas basins, and drilled seven wells in the Santos and Foz do Amazonas basins.

Industry Intelligence Editor's Note: According to a press release from Devon Energy, the sale price was US$3.2 billion.

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