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Devon Names New CEO as Gulf Sales Become Final

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Associated Press

OKLAHOMA CITY -- Devon Energy Corp. has named John Richels as the third chief executive officer in company history, even as the independent oil and natural gas producer said Wednesday it is finalizing its sale of its Gulf of Mexico assets.

Devon's board voted Tuesday to make Richels, 59, the company's CEO and create a new position of executive chairman for Larry Nichols, who had been the CEO since 1980 and succeeded his father in that position. Devon was founded in 1971.

Richels, who has been with Devon for 12 years, will maintain his role as the company's president. Before joining Devon, Richels was the chief financial officer of Northstar Energy Corp.

"Larry and I have worked together for so long now, there's been a pretty natural transition that's happened," Richels told The Associated Press. "I've had the opportunity to receive Larry's mentorship over time. I've learned a lot from him. I'm sure we're going to continue to work together for a long time."

The formal transition from Nichols to Richels comes as Devon completes the sale of its Gulf assets. Nichols said the last portion of that process should be finalized Wednesday.

Devon started its move out of the Gulf last year, long before the April 20 explosion of a rig operated by BP LLC and owned by Transocean Ltd. that killed 11 men and left a blown-out well releasing millions of gallons of oil into the Gulf.

Still, Nichols acknowledged Devon's decision to exit the Gulf when it did proved fortuitous, considering the fallout from the oil spill.

"There were some people who questioned our analysis of risk-reward in that area," Nichols told shareholders. "I don't care whether you view it as skill or luck, we'll take it whichever way it goes."

Devon said in May 2009 it wanted partners to relieve the cost of developing four of its Gulf discoveries, then decided in November it would divest its Gulf and international assets, choosing instead to focus on its onshore North American properties.

Since then, Devon has worked a number of deals. In the first quarter of the year, Chevron Corp. and partners, Maersk Oil and Petrobras, Brazil's state-run oil company, bought three of Devon's deepwater Gulf development projects for a total of $1.3 billion.

In March, BP said it would buy Devon's rights for 10 exploration blocks in Brazil and others in the Gulf and in the Caspian Sea near Azerbaijan for $7 billion. Apache Corp. said it would buy oil and gas assets in the Gulf from Devon for $1.05 billion in the next month. That was the deal Nichols hoped would be finalized Wednesday.

The sale of just Devon's Gulf assets should net the company about $3.3 billion after taxes, which Nichols said would be used to pay down debt, buy back company shares and "plow money back into the business in the areas where we have expertise."

Richels said part of Devon's decision-making process when it came to exiting the Gulf was the risk factor.

"While obviously we didn't foresee this tragedy that occurred in the Gulf, we did realize that by getting out of (the Gulf's) deep water and out of international (projects), we were lowering the overall risk profile of our asset base," Richels said.

Devon's market capitalization of about $29.6 billion makes it the second-largest of North America's independent petroleum producers, companies that hunt for oil but do not refine it into gasoline and other products. Apache is the largest, at $31 billion.

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