When I was a kid, I had a Beverly Hillbillies -inspired fantasy that someone would strike oil in our backyard. It never happened not in Quincy, Ill. but the prospect of finding oil still stirs feelings of excitement and adventure. A few years ago, when three oil companies announced a huge deep-water oil discovery in the Gulf of Mexico, I figured I might as well get a piece of the action, especially with global oil reserves dwindling. I bought (and recommended) two of the three with the biggest stakes: U.S. companies Chevron (CVX) and Devon Energy (DVN) .

At the time, analysts said the find might increase U.S. reserves by 50%. I m not sure it ever lived up to those expectations, but already the discovery is starting to pay off. Last week, global oil giant BP (BP) announced that it would pay Devon Energy $7 billion for its stakes in the Gulf of Mexico, Brazil and other regions, far more than analysts had expected. Considering the market capitalization of the entire company was less than $30 billion before speculation about the deal drove Devon s stock up, I wonder why BP didn t just buy the whole company. Still, I m not complaining. Devon shares were trading early this week at close to $70. A year ago they were $46.

Still, Devon s asset sale begs the question: Should investors hold on to Devon? The company says it will use the proceeds to further exploit its U.S. oil and natural gas properties as well as Canadian oil sands projects. The deal will leave it more exposed to natural gas prices. This may be all to the good. But the simple fact is that I bought Devon for its oil reserves in the Gulf and Brazil, which are now gone. For me, it s time to sell. This is a simple lesson that is often easy to overlook: When the reason you bought a stock disappears, it s time to sell.

Just a few weeks earlier, on Feb. 21, Schlumberger (SLB), the largest oil field services company, announced that it would acquire another of my holdings, Smith International (SII) . It s always a nice surprise to be on the receiving end of a takeover bid, especially when there s a generous premium, which in this case was nearly 38%. When you own stock in the target of a takeover bid, the merger and acquisition playbook says sell. But since this is an all-stock deal 0.697 shares of Schlumberger for each of Smith Smith shareholders need to decide if they want to become Schlumberger shareholders.

It will probably take months for the deal to close, and an antitrust review is underway. So Smith holders bear the risk of the deal not closing. That doesn t seem substantial. Smith s strength is drill bit technology, which complements Schlumberger s broad exploration focus. There s not that much overlap, which is good from an antitrust perspective. But the merger isn t likely to reduce competition, so it probably won t do anything for profit margins. As I ve said before, what s good for consumers isn t necessarily good for shareholders. From an investor standpoint, the best mergers are those that reduce competition and barely pass muster under the antitrust laws. So there s no compelling reason to own Schlumberger simply because of the Smith deal.

Schlumberger is the leading company in its sector and will soon be able to offer customers a wider range of services, so investors who want to maintain their exposure to the oil services sector might well want to own Schlumberger. But this deal and BP s purchase of Devon assets coincide with my strategy to reduce exposure to oil, gas and other commodities as we shift to an environment of rising interest rates. Selling Devon and Smith is a good way to start reorienting my portfolio, as well as raise cash, now that the market is hitting new highs again after its mini-correction earlier this year.

Although I m reducing my energy exposure somewhat, every portfolio should maintain some positions both as an inflation hedge and a bet on global growth. I still own Chevron and the Brazil ETF. For investors who want additional exposure to Brazil s immense oil producing potential, I d also consider Petrobras (PZE) . (Petrobras is the largest holding in the iShares MSCI Brazil Index exchange-traded fund (EWZ) .) Another intriguing possibility is BG Group (BRGYY), based in London. BG focuses primarily on natural gas but owns a potentially lucrative stake in Brazil s deep-water Santos basin.