Canada Pension Plan Investment Board (CPPIB), the country's biggest public pension fund, plans to invest up to $1 billion to buy oil and gas assets in the U.S. in a partnership with Encino Energy Ltd.
CPPIB said June 28 the partnership, Encino Acquisition Partners, would seek noncore 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 $25 million.
CPPIB, which manages C$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 remodelling their portfolios to pursue higher growth in the Permian and Scoop/Stack," Dey said.
International oil majors like ConocoPhillips Co. (NYSE: COP) have this year sold off oil and natural gas assets in both the U.S. and Canada to trim heir portfolios.
CPPIB already holds close to C$4.5 billion of assets in the energy sector, 80% of which are in western Canada. In the U.S. it holds $900 million of Denver-Jules Basin assets acquired from Encana Corp. (NYSE: ECA) in 2015. The fund started investing natural resources in 2015 and it is one of the smaller groups in its portfolio.
Dey said CPPIB 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. (US$1 = C$1.3047)