Aera Energy is said to be the second-largest oil and gas producer in California and accounts for almost one-fourth of hydrocarbon production in the American state

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IKAV to divest 49% stake in Aera Energy from CPP Investments. (Credit: John R Perry from Pixabay)

Canada Pension Plan Investment Board (CPP Investments) has agreed to acquire a 49% stake in Aera Energy, an oil and gas producer in California, US, from German asset management group IKAV.

The financial terms of the deal were not disclosed.

Through two separate deals, IKAV recently acquired Aera Energy from ExxonMobil and Shell, which formed the Californian joint venture in 1997.

IKAV acquired a 51.8% stake in Aera Energy from Shell’s subsidiary Shell Offshore for about $2bn in cash. The remaining stake of 48.2% was acquired by the German firm from ExxonMobil’s affiliate Mobil California Exploration & Producing.

Aera Energy is said to be the second-largest oil and gas producer in California and accounts for almost one-fourth of the state’s hydrocarbon production.

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.”

Aera Energy produces oil and associated gas from nearly 13,000 wells in the San Joaquin Valley with operations spanning the Ventura, Monterey, and Fresno counties.

The partnership between CPP Investments and IKAV is expected to expedite Aera Energy’s ability to cut down carbon intensity further and underpin the development of carbon capture and storage as well as other emerging technologies.

According to the partners, in the course of time, renewable power will be installed across Aera Energy’s acreage, while certain legacy oil and gas infrastructure will be repurposed to facilitate carbon capture and storage capability.

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.”