BP Nearing Brazil Approval for Devon Deal, Regulator Says

BP Plc (BP/), whose stock lost a third since the biggest U.S. oil spill, may win approval for its $3.2 billion purchase of Devon Energy Corp. (DVN)’s Brazil assets as soon as this month, a top lawyer at the nation’s oil regulator said.

The London-based company meets the “technical” requirements to operate offshore Brazil where eight of the 10 blocks BP plans to buy from Devon are located, said Tiago Macedo, general counsel for the National Hydrocarbons Agency.

“The approval of BP, relating to Devon, is technically authorized -- the only thing missing is the formal approval of this transfer,” Macedo said in an interview late yesterday in Rio de Janeiro, where the agency is based. “There should be no impediment to BP giving continuity to these contracts.”

The ANP, as the regulator is known, has reviewed BP’s operational and financial capabilities for over a year and asked the company for additional documentation after the spill at the offshore Macondo well in the Gulf of Mexico. The two companies originally expected the deal to close last year.

BP London-based spokesman Mark Salt declined to comment on the timing of the approval process.

BP rose 85 pence, or 0.2 percent, to 475.70 pence as of 2:49 p.m. in London, after earlier rising to as much as 476.70 pence.

Devon’s blocks are in up to 8,150 feet (2,484 meters) of water in the Campos basin, compared with 5,000 feet at Macondo. The Devon purchase would give BP oil fields in a country that plans to double production by 2020 as it develops the largest discoveries in the Americas since Mexico’s Cantarell in 1976.

‘Good News’

“It’s good news in that there is another highly reputable source endorsing BP,” Jason Gammel, an analyst at Macquarie Capital Europe Ltd. in London said today in a telephone interview. “It suggests that the industry overall has faith in BP to be stronger moving forward. The Campos basin is highly prospective, so it’s a nice asset for the portfolio.”

Oklahoma-based Devon sold all of its offshore and international assets last year to focus on production in the U.S. and Canada.

The Polvo field Devon operates in shallow waters of the Campos Basin produced 12,265 barrels a day in January, according to data on the ANP’s website. Devon discovered the Itaipu prospect in deep waters of the Campos basin in late 2009, and also found oil last year at the BM-C-34 block in the same area. Devon also holds a 25 percent stake in the Wahoo discovery, operated by Anadarko Petroleum Corp.

Emerging Markets

BP Chief Executive Officer Robert Dudley is stepping up exploration in emerging markets, which the company expects to lead a 40 percent gain in global energy demand by 2030.

Since the start of the year, BP has signed exploration agreements in Australia, Russia and India for offshore oil and gas. BP sealed a partnership with Cnooc Ltd. last year to explore the South China Sea.

BP has yet to return to drilling in the Gulf of Mexico after the ban on exploration was lifted in October. The company has applied to drill one new deepwater well there, according to a person familiar with the application. Interior Secretary Ken Salazar said April 4 that doesn’t have any agreement to resume drilling in the region.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at Pmillard1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts in Buenos Aires at dcrofts@bloomberg.net

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