brazilJust days after outlining its business strategy BP is offering a massive $7 billion in cash to buy Devon Energy’s deepwater assets.

In a broad-ranging deal, BP will pay Devon Energy $7 billion for assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico.

Interestingly the deal also involves extraction of the oil sands. BP will sell a 50 per cent stake to Devon Energy in BP’s Kirby oil sands interests in Alberta, Canada, for $500 million.

The parties have agreed to form a 50/50 joint venture, operated by Devon, to pursue the development of the tar sands venture.

But the main part of the deal is in Brazil. Andy Inglis, BP’s chief executive of Exploration and Production, said: “Through our entry into Brazil, BP will add a major position in another attractive deepwater basin. Together with the additional new access in the Gulf of Mexico, it further underlines our global position as the leading deepwater international oil company.”

However, has BP bet on the wrong horse?

To be the leading international deepwater company, you need to be in the right geological basins.

The deal will give BP a diverse and broad deepwater exploration acreage position offshore Brazil with interests in eight licence blocks in the Campos and Camamu-Almada basins. The Campos basin blocks include three discoveries – Xerelete, pre-salt Wahoo and Itaipu – and the producing Polvo field.

As the Daily Telegraph points out Devon’s assets are not in the strategic Santos basin where most of the recent excitement has been focused after multi-billion barrel discoveries in recent years.

So far this morning BP’s shares have slipped 5.3p to 619.6p, knocking nearly 4 points off the FTSE 100.

This could be a reaction to BP buying into the wrong basin….