OKLAHOMA CITY – Devon Energy Corp. (NYSE: DVN) has formed a heavy oil joint venture with BP to develop BP's Kirby oil sands leases in Alberta, Canada. In order to facilitate the oil sands joint venture, Devon will acquire 50% of BP's interest in the Kirby oil sands leases.
Devon will pay BP $500 million at closing and commit to fund an additional $150 million of capital costs on BP's behalf. Devon will be the operator of the Kirby project which lies in close proximity to Devon's highly successful Jackfish steam-assisted gravity drainage (SAGD) project. Like Jackfish, Kirby is expected to be a multi-stage SAGD development. Devon and BP also agreed to negotiate a long-term heavy crude sales agreement for Devon's share of Kirby production.
"We are excited about the opportunity to work with a world-class organization such as BP to leverage our SAGD expertise from Devon's industry-leading Jackfish project," said John Richels, Devon's president. "While the Kirby development will require additional evaluation to confirm its size and scope, we believe that it will support several phases of development and has total recoverable resources that are greater than our Jackfish complex. We believe Kirby to be similar to Jackfish in terms of geology, reservoir characteristics and oil quality."
