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Majors Dogpile Onto Devon's Deepwater Trove

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Last month, Devon Energy (NYSE: DVN  ) began its transformation from global oil and gas company to North American resource player with a $1.3 billion sale of three Gulf of Mexico stakes to Maersk Oil. Well, that deepwater deal is now scuttled, but this is very positive news for Devon.

As mentioned in my previous article, for Maersk to walk away with this prize (pegged by the company at more than 200 million net barrels), Devon's partners at Cascade, St. Malo, and Jack would all have to pass on exercising their preferential rights. Such an exercise has come to pass at the first two fields, though details are lacking. We just know that current interest owners are willing to match whatever Maersk had agreed to pay for a 50% cut in Cascade and a 25% slice of St. Malo.

Petrobras (NYSE: PBR  ) holds the other 50% of Cascade, so we know where to point the finger in that instance. The Brazilian company is also the operator and 66% owner of the neighboring Chinook field. These fields are being developed jointly, and will be "tied back" to (i.e., their production will flow to) a common floating production platform. It's not surprising that Petrobras would want to increase its control over Cascade, where Devon was previously operator, rather than let an unfamiliar partner take the reins.

As for St. Malo, there are several candidates. Chevron (NYSE: CVX  ) is the operator and largest interest owner, while Petrobras owns 25%, and each of Statoil (NYSE: STO  ) , ExxonMobil (NYSE: XOM  ) , and Eni holds a very small interest. It's anyone's guess which company stepped up to the plate here. It's also not very important.

The key takeaway here is that the deepwater Gulf of Mexico continues to captivate the world's leading international oil companies. This is great news for Devon, which is likely to fetch strong prices as it proceeds to monetize assets. It's also encouraging for shareholders of subsea servicers like Cameron (NYSE: CAM  ) and FMC Technologies (NYSE: FTI  ) .

Petrobras and Statoil are Motley Fool Income Investor recommendations. Dive deep into the dividend-focused service, free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 27, 2010, at 12:51 PM, madmilker wrote:

    DVN rocks....and the nice people of San Augustine, TX luv it.

  • Report this Comment On February 02, 2010, at 9:36 PM, XMFSmashy wrote:

    Chevron confirmed on its Q4 conference call that it has exercised its preferential rights at St. Malo.


  • Report this Comment On March 10, 2010, at 4:43 PM, XMFSmashy wrote:

    So has Statoil.. bumped interest up to 21.5%.


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