BP's Unit Acquires San Juan Basin Assets from Devon Energy
U.K. supermajor BP plc BP announced that its U.S. Lower 48 Onshore oil and natural gas company has agreed to acquire all of Devon Energy Corp.'s DVN assets in the San Juan Basin in New Mexico and Colorado.
The U.S. onshore unit purchased interests in Devon’s storied assets – the Northeast Blanco Unit (“NEBU”) – in the San Juan Basin. The affiliate also bought a section of federal lands located in San Juan and Rio Arriba counties of New Mexico. The financial terms of the deal, however, were not disclosed.
BP’s presence in the region dates back to the 1920s. With the transaction, BP would acquire interest in 480 producing wells spread over 33,000 gross acres by the first quarter of 2016, subject to necessary government agency approvals.
The transaction marks Houston-based Lower 48 Onshore oil and natural gas business’s first major purchase in seven years and emphasizes its commitment to the San Juan Basin. The San Juan Basin ranks among the Lower 48's most prolific areas with a capacity to yield around 93,000 barrels of oil equivalent per day.
The latest agreement comes on the heels of Devon’s decision to buy assets worth $2.5 billion in western Oklahoma and Wyoming.
Per a Devon video on the development of the NEBU, the company started work on the field while still a small enterprise with just two geologists, six engineers and four landmen. Though the company had initially used new techniques to produce coalbed methane in the NEBU, the attempts were not quite successful till 1988.
In 1998, Devon had a working interest of 23% and 18% net revenue interest in 33,000 acres in the NEBU. The unit, which was considered to be holding Devon’s largest reserves, helped the company become one of New Mexico’s top natural gas producers.
BP carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are ReneSola Ltd. SOL and Boardwalk Pipeline Partners, LP BWP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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