London: BP Plc will pay Devon Energy Corp $7 billion (Dh26 billion) for assets in Brazil, the Gulf of Mexico and Azerbaijan, adding fields that may extend its production lead over ExxonMobil Corp.

"This is one of the best deals BP has ever made," Jason Kenney, head of oil and gas research at ING Commercial Banking in Edinburgh, said in a telephone interview. "Brazil was missing from BP's portfolio, and the assets are all high-margin barrels."

BP, which overtook Exxon for the first time last year with 4 million barrels a day of production, will enter deepwater exploration off Brazil. With his biggest purchase since becoming CEO in 2007, Tony Hayward may add more than 100,000 barrels a day of oil by 2015, according to Kenney.

As part of the cash deal, Devon will buy a 50 per cent interest in BP's Kirby oil sands project in Canada, BP said in a press release yesterday. Devon, which is selling assets to focus on North America, will pay $500 million for its stake and meet $150 million of BP's capital costs.

Devon surged 5.4 per cent to $75.8 in German trading. BP was down 0.3 per cent at 623.10 pence as of 11.21am in London. The shares have risen 39 per cent in the past year.

In Brazil, BP will have access to deepwater exploration in eight blocks in the Campos and Camumu-Almada basins, as well as two onshore licences in the Parnaiba basin.

Entering Brazil

Petroleo Brasileiro SA, Repsol YPF SA and BG Group Plc found more evidence of oil in the same offshore Brazilian block where the companies' Guara field holds as much as 2 billion barrels of crude, Brazil's National Petroleum Agency said on Wednesday. Royal Dutch Shell Plc and Galp Energia SGPS SA are investing in the country's deep-sea, pre-salt region, whose Tupi field is the largest find in the Americas since 1976.

For BP, "Brazil was the single type of asset play they lacked the most," Gudmund Halle Isfeldt, an Oslo-based analyst at DnB NOR ASA, said in a telephone interview. "They also increase their footprint in deepwater oil in the Gulf of Mexico."

Oil companies worldwide are seeking acquisitions to bolster reserves. Yesterday's purchase is BP's biggest since it started the Russian TNK-BP joint venture in 2003.

Exxon sought last year to buy closely held Kosmos Energy LLC's Ghana assets, including a stake in the offshore Jubilee field, valued at about $4 billion. Exxon agreed to buy gas producer XTO Energy Inc for $29 billion in December. Total SA and China National Offshore Oil Corp will become partners with Tullow Oil Plc in Uganda.

Devon's assets may add 40,000 barrels a day for BP starting next year, based on current production, with "huge potential" for exploration, BP spokesman David Nicholas said. The company said last week it aims to increase production by as much as two per cent annually through 2015.

"This strategic opportunity fits well with BP's operating strengths and key interests around the world," Hayward said in yesterday's statement. "As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets."