By Andrew Willis
There’s a hungry new predator wandering the oil sands, as Devon Energy (NYSE:DVN) shifts its acquisition focus to Alberta by dropping $500 million (U.S.) for a stake in a BP (NYSE:BP) oil sands project.
As part of a broad strategic reposition that saw Oklahoma City-based Devon sell international oil and gas properties to BP for $7 billion on Thursday, Devon picked up a half interest in BP's Kirby land leases, an oil sands project located near Alberta’s Cold Lake Air Force base.
Devon already owns a project in this region, called Jackfish. The two properties can be developed with the same technology - steam is injected into reserves, and the liberated oil is pumped out of the ground. Devon signaled Thursday that it intends to spend what's needed to expand production in Alberta, commiting $150 million to defraying BP's development costs at the Kirby project.
Devon also went out of its way to point out that when it finishes selling assets and morphs into a pure North American onshore oil and gas play, it will have up to $7.5 billion to spend. Further acquistions of either oil sands properties or entire companies seem inevitable.
A glance at an Alberta government map shows what doors Devon executives will knock on as they put the rest of that warchest to work. Other companies with projects in the Kirby and Jackfish region include Enerplus, Canadian Natural Resources (NYSE:CNQ), privately-owned MEG Energy, Petrobank (OTCPK:PBEGF) and Cenovus Energy (NYSE:CVE).