Updated from 12:20 a.m. EST

OKLAHOMA CITY (

TheStreet

) --

Devon Energy

(DVN) - Get Report

agreed to sell all its assets in the deepwater Gulf of Mexico, Brazil and Azerbaijan to

BP

(BP) - Get Report

for $7 billion, confirming earlier reports.

Devon, in a statement Thursday, said it also will form a heavy oil joint venture to develop BP's Kirby oil sands leases in Alberta, Canada. BP also will assume Devon's leases of the Seadrill West Sirius and Transocean Deepwater Discovery drilling rigs for the duration of the contract terms.

"These sales, combined with our previously announced divestitures of $1.3 billion of deepwater Gulf of Mexico assets, put Devon well on the way to completing its strategic repositioning," said Larry Nichols, Devon's chairman and CEO, in a statement. "Given any reasonable sales price for Devon's remaining divestiture assets, the transactions to date suggest that our total after-tax proceeds for the entire divestiture program will exceed our previously announced range of $4.5 to $7.5 billion."

Devon expects the various transactions to close at different times before the end of 2010.

Devon said it will acquire 50% of BP's interest in the Kirby oil sands leases, paying $500 million at closing and committing to fund an additional $150 million of capital costs on BP's behalf. Devon will be the operator of the Kirby project.

As reported earlier by the

Wall Street Journal

, the deal gives BP an entry into Brazil's offshore assets and reinforces its dominance in the Gulf of Mexico.

Devon is unloading the assets because it has decided to concentrate on its onshore projects in North America.

The U.K.'s BP is the largest producer in the Gulf of Mexico, but before this deal had no exposure to offshore Brazil, the

Journal

notes.

-- Reported by Joseph Woelfel in New York.

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