Canada Pension Plan Investment Board (CPP Investments) has agreed to purchase a 49% stake in US-based oil and gas producer Aera Energy from German asset manager IKAV.
The financial terms of the deal were not disclosed.
Aera Energy, which was created as a joint venture between Shell and ExxonMobil, is claimed to be the second-largest oil and gas producer in California.
It accounts for almost one-fourth of the state’s hydrocarbon production.
The firm produces oil and associated gas from nearly 13,000 wells in the San Joaquin Valley. It has oil field operations in the Ventura and Monterey counties.
Through two separate deals, IKAV recently acquired Aera Energy from ExxonMobil and Shell.
IKAV purchased a 51.8% stake in Aera Energy for approximately $2bn in cash from Shell’s subsidiary Shell Offshore.
The remaining 48.2% stake in Aera was acquired from ExxonMobil’s affiliate Mobil California Exploration and Producing.
CPP Investments managing director and sustainable energies head Bruce Hogg said: “Our investment in Aera Energy is consistent with a number of investments we’ve made, which will help California transition to secure, green energy supplies while at the same time will deliver long-term risk-adjusted returns for the CPP Fund.
“CPP Investments believes that enabling emissions reduction and business transformation in the energy sector can drive strong returns for long-term investors as part of the whole economy transition, and partnering with a like-minded investor like IKAV presents an excellent opportunity to put that decarbonisation investment approach into action.”
The partners plan to use renewable power across Aera Energy’s acreage. It will also repurpose certain legacy oil and gas infrastructure to facilitate carbon capture and storage capabilities.
IKAV chairman Constantin von Wasserschleben said: “We are aligned with CPP Investments in our commitment to achieving a smooth and sustainable transition to renewable energy.
“By delivering an energy solution at Aera that ties renewable growth with the safe and responsible operation of conventional energy assets, we are pursuing the right steps to balance California’s energy demand with its future climate goals.”