2010-03-11-2010-03-11

To acquire 50% WI in 90,000-acre Kirby SAGD oil-sands leases in Alberta.

Oklahoma City-based producer Devon Energy Corp. (NYSE: DVN) plans to acquire a 50% operated working interest in the heavy oil Kirby project in Alberta from British major BP Plc (NYSE: BP) or $500 million in cash and $150 million in drilling carries.

The assets include approximately 90,000 net acres in the Kirby oil-sands leases near Devon's Jackfish steam-assisted gravity drainage (SAGD) project in the Athabasca region of Alberta.

Devon president John Richels says, "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."

Andy Inglis, BP chief executive of exploration and production, says, "Devon is an experienced operator in the Canadian oil sands with a proven track record of in situ development and production. We expect this transaction will accelerate the development of the Kirby assets and, through the associated crude off-take agreement, provide a secure source of Canadian heavy oil for our advantaged Whiting (Indiana) refinery."

Devon estimates the gross risked resource potential to be between 1- and 1.5 billion barrels of oil.