BP’s Lower 48 unit buys Devon’s New Mexico assets

This article was updated Jan. 4, 2016, to correct an implication that BP's unit had acquired all of Devon's New Mexico assets. Devon continues to have a position in the Delaware basin, including southeast New Mexico.

The newly separated US Lower 48 onshore business of BP PLC has acquired certain New Mexico assets belonging to Oklahoma City-based Devon Energy Corp. A purchase price was not disclosed.

The move "significantly" expands BP’s operations in the San Juan basin spanning northern New Mexico and southern Colorado, and marks the first major acquisition by its Lower 48 business in more than 7 years, the company says.

The bulk of the acquired assets consist of Devon’s operated interest in the Northeast Blanco unit, a section of federal lands in San Juan and Rio Arriba counties of New Mexico, where BP has had a presence since the 1920s.

The company anticipates taking over operations of the unit’s 480 wells spread across 33,000 gross acres in first-quarter 2016 after receiving required government agency approvals. In the San Juan basin, the company holds more than 550,000 net acres and has net production of 100,000 boe/d.

In early 2015, BP began operating its Lower 48 onshore operations as a separate business (OGJ Online, Mar. 4, 2014), which is led by David Lawler (OGJ Online, Aug. 20, 2014).

BP says the unit has begun to demonstrate higher capital efficiency and lower operating costs. The unit has a material resource base of 7.5 billion bbl across 5.7 million net acres, with net production of 290,000 boe/d.

Devon this month agreed to acquire 80,000 net surface acres in the Anadarko basin STACK play from Felix Energy LLC, a Denver-based portfolio company of EnCap Investments, for $1.9 billion (OGJ Online, Dec. 7, 2015). In a second deal, Devon agreed to acquire 253,000 net acres in the Powder River basin for $600 million.  

It said the deals will be funded with $1.35 billion of Devon equity issued to sellers and $1.15 billion of cash on hand and borrowings.               

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