Devon's Partners Buy Stakes at Cascade, St. Malo

HOUSTON (Dow Jones), Jan. 26, 2010

Devon Energy Corp. (DVN) confirmed Monday that its partners in two ultradeep water oil discoveries in the U.S. Gulf of Mexico have decided to exercise their preferential purchase rights, pushing aside Danish conglomerate AP Moller Maersk A/S (MAERSK-B.KO), which has previously agreed to buy the stakes.

"Our partners at Cascade and St. Malo have exercised their option to purchase our position in those places," said Chip Minty, a Devon spokesman. "We are still in the process of talking with Maersk about Jack and also other assets we have in the Gulf."

The Oklahoma City-based company said partners would pay the same amount Maersk had agreed to pay for those assets in December. Devon declined to give a breakdown of how much companies are paying for the stakes in each project. Maersk had announced late last year an agreement to buy the stakes in the three projects for $1.3 billion. The company sought a 25% interest in Jack and St. Malo and a 50% stake in Cascade. Maersk said Friday it is now considering its options under the purchase agreement to buy into the Jack field.

Brazil's state-run Petroleo Brasileiro S.A., or Petrobras (PBR, PETR4.BR), the operator of Cascade, confirmed Monday that it is buying the stake. San Ramon, Calif.-based Chevron Corp. (CVX), the operator and Devon's main partner in St. Malo, so far has declined to comment.

The companies' move to exercise their preferential purchase right is a major vote of confidence in the emerging Lower Tertiary play of the Gulf of Mexico, an area 150 miles off the coast of Louisiana where no oil is currently produced but where the energy industry has made several large finds.

"This a strong indication of how good those assets are," said Fadel Gheit, analyst at Oppenheimer & Co. Inc. "We are going to see more of these large companies waiting to see how much others want to pay and then match the bid."

Although exploring for energy resources in the Gulf of Mexico is onerous, with rates for drilling rigs still at more than a half million dollars a day, companies from around the world are flocking to the area because it is safer and offers a more stable fiscal regime than other regions. The Gulf of Mexico is also one of the few areas where major oil companies can still access new giant reserves using their technical and financial strength.

Devon said last year that it will sell its international and Gulf of Mexico assets to reduce debt and refocus in on North American onshore gas fields. The independent oil and natural gas producer said it expect to raise $4.5 billion to $7.5 billion from the asset sell.

Besides Devon and Chevron, Eni SpA (E), Exxon Mobil Corp. (XOM), Statoil ASA (STO, STL.OS) and Petrobras own stakes in St. Malo, according to records posted online by the U.S. Minerals Management Service, which oversees offshore oil and gas development.

Copyright (c) 2010 Dow Jones & Company, Inc.

Related Companies
 Company: Exxon Mobil Corporationmore info


 - Nigeria To Mediate In Dispute Between Exxon And Labor Unions (May 24)
 - Shell Shareholders Reject Emissions Target Proposal (May 23)
 - ExxonMobil, Total Discuss Offshore Drilling Opportunities In Greece (May 19)
 Company: Minerals Management Service (MMS)more info
 - Obama Names New Head of MMS (Jun 15)
 - Abbey Implements New Drilling Requirements (Jun 7)
 - MMS Chief Resigns (May 27)
 Company: Petrobrasmore info


 - Petrobras Sees Room For More Efficient Payroll, CAPEX (May 12)
 - Petrobras Eyes Adding Texas, African Assets to Asset Sale Plan (May 10)
 - Exxon, Petrobras Said to Hold Talks on Wide-Ranging Partnership (May 9)
 Company: Statoilmore info


 - Norway's Statoil Plays Down Risks Ahead Of Arctic Drilling (Apr 24)
 - Statoil Confident Brazil Deal To Go Ahead Despite Suspension (Apr 18)
 - Statoil Exec: Effective Leaders Should Empower People and Machines (Mar 24)
 Company: Chevron Corporationmore info
 - Venezuela Oil Executive Arrested in Corruption Probe (May 23)
 - Woodside Sees Output Growing 15 Pct Over Next Three Years (May 23)
 - Shell Shareholders Reject Emissions Target Proposal (May 23)
 Company: Devon Energymore info
 - Devon Energy Plans To Divest $1B Assets; Profit Beats (May 2)
 - Devon Energy Beats Profit Estimates As Cost Cuts Pay Off (Feb 14)
 - E&P Companies Target Potential of STACK, SCOOP Plays (Aug 25)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Senior Proposals Specialist
Expertise: Business Development|Marketing|Sales
Location: Houston, TX
 
Principal Consultant
Expertise: Business Development
Location: Houston, TX
 
Project Manager
Expertise: Project Management
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $54.15/BBL 0.51%
Light Crude Oil : $51.47/BBL 1.45%
Natural Gas : $3.22/MMBtu 3.30%
Updated in last 24 hours