China's largest offshore oil producer China National Offshore Oil Corporation (CNOOC) has agreed to acquire 24.5 per cent stake in Panyu field in South China Sea oil block from US-based Devon Energy Corporation, for $515 million.

With the acquisition, the Beijing-based CNOOC, the operator of the Panyu field, will increase its stake from 51 per cent to 75.5 per cent, while the other partner, ConocoPhillips will continue to hold the remaining 24.5 per cent.

Devon's production from the Panyu field was approximately 12,000 barrels of oil per day in 2009.

The Panyu field is located in the Pearl River Mouth Basin in the South China Sea, about 200 km south of Hong Kong at a depth of 100 meters.
 
CNOOC said that Panyu 4-2/5-1 is the major producing oil field in Block 15/34 and started production in 2003. Currently gross production from the block is 49,000 barrels of oil per day.

"This is a mutually beneficial deal for CNOOC and Devon. I believe the transaction will help further strengthen our solid position in offshore China and create more value for our shareholders," said Yang Hua, president of CNOOC.

Oklahoma City-based Devon, one of the world's leading independent oil and gas exploration and production companies, had revealed plans in November 2009 to divest all of its international assets, including those in the Gulf of Mexico, in a move to focus on its core onshore portfolio in North America and repay its debt. (See: Devon Energy plans to raise up to $7.5 billion through asset sales) 

The company had expected to generate $4.5 billion to $7.5 billion through the sale, and hoped that the strategic repositioning would be highly accretive to company's earnings, cash flow, and reserves beginning 2011.

"Since announcing our plans this past November to strategically reposition the company to focus on its world-class North American onshore assets, we have divested nearly $10 billion of Gulf of Mexico and international assets," said Larry Nichols, Devon's chairman and chief executive officer.

In December, A P Moller-Maersk Group, the Danish business with interests in container services, energy and shipping, said it was acquiring Devon Energy Corporation's interests in the Cascade, Jack and St Malo oil fields in the Gulf of Mexico for $1.3 billion.(See: Maersk acquires Devon Energy's Gulf of Mexico oil stakes for $1.3 billion) 

But, after a month, the Copenhagen-based Maersk called off the acquisition since Brazilian state oil company Petrobras-operator of the Cascade field and Chevron, operator of the Jack and St Malo fields, exercised their preferential purchase rights. (See: Moller-Maersk calls off $1.3 billion acquisition of two oil fields in the Gulf of Mexico) 

Devon then sold its oil and gas assets in Brazil, the Gulf of Mexico and Azerbaijan last month to the UK oil giant British Petroleum, for $7 billion. (See: BP to buy Devon Energy's LatAm, Azerbaijan oil and gas assets for $ 7 billion)