Canada Pension Plan Investment Board (CPPIB), the country’s biggest public pension fund, plans to invest up to US$1 billion to buy oil and gas assets in the United States in a partnership with Encino Energy Ltd.
CPPIB said on Wednesday the partnership, Encino Acquisition Partners, would seek non-core assets being sold by global energy majors and would focus on basins already producing oil and gas.
Houston-based energy company Encino Energy, which is privately-owned, will operate the assets acquired by the partnership and has committed US$25 million.
CPPIB, which manages $317 billion (US$243 billion) of national pension money on behalf of 20 million Canadians, does not have any particular assets or regions in mind, said Toronto-based Avik Dey, the fund’s head of natural resources. It is looking to buy assets being sold by large energy companies as they spend money on developing red-hot U.S. shale basins like the Permian and the so-called SCOOP and STACK plays in Oklahoma.
“We see an emerging opportunity to buy attractive assets from bigger companies that are remodeling their portfolios to pursue higher growth in the Permian and SCOOP/STACK,” Dey said.
International oil majors like ConocoPhillips Co have this year sold off oil and natural gas assets in both the United States and Canada to trim heir portfolios.
CPPIB already holds close to $4.5 billion of assets in the energy sector, 80 percent of which are in Western Canada. In the United States it holds US$900-million of Denver Jules Basin assets acquired from Encana Corp in 2015. The fund started investing in natural resources in 2015 and it is one of the smaller groups in its portfolio.
Dey said although the partnership with Encino would be specifically focused on buying U.S. assets, it did not signify the fund was moving away from investing in the Canadian energy sector.
By Nia Williams
(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty and Andrew Hay)
Photo courtesy of Grafissimo/E+/Getty Images