Canadians and Germans to Own California’s Second Largest Oil and Gas Producer
Posted on 03/01/2023
Aera Energy LLC is a California company. Aera Energy was formed in June 1997 and it is headquartered in Bakersfield. Canada Pension Plan Investment Board (CPP Investments) will partner with international asset management group Institut für Kapitalanlagen und Versicherungslösungen GmbH (IKAV) to acquire California energy producer Aera Energy. IKAV was established in 2010. IKAV invests in green and brown field energy infrastructure assets in wind, solar, conventional energy, hydro, geothermal, pipelines, CSP, storage as well as other power plants.
In September 2022, IKAV, which has renewables expertise as well as a track record managing U.S. conventional energy assets, announced plans to acquire Aera Energy. IKAV acquired Aera Energy for US$ 4 billion.
CPP Investments agreed to purchase 49% of Aera Energy from IKAV. Created as a joint venture between Royal Dutch Shell plc (then CalResources LLC) and then Mobil Exploration & Producing US Inc. (Exxon Mobil Corporation), Aera Energy is California’s second-largest oil and gas producer and accounts for nearly 25% of California state’s production. Exxon Mobil owned 48% of Aera, while Shell Onshore Ventures LLC owned the remaining 52% ownership (which sold for US$ 2 billion plus contingent payments based on oil prices). Aera is operated as a stand-alone company through its board of managers. Most of Aera’s production is located in the San Joaquin Valley. In 2021, Aera produced approximately 95,000 barrels of crude oil equivalent per day.
CPP Investments and IKAV intend to help Aera balance its energy transition efforts with the need to continue meeting California’s conventional energy demands by investing in a renewable energy portfolio that will power Aera’s existing operations. Over time, renewable power will be deployed across Aera’s land holdings, while selected legacy oil and gas infrastructure will be repurposed to create carbon capture and storage capability.
Advisors for the IKAV Acquisition of Aera Energy
Citigroup was lead financial advisor. Truist Securities and Wells Fargo Securities were financial advisors to IKAV as well. Haynes and Boone, LLP acted as legal advisor to IKAV.
IKAV has an established track record in owning and operating U.S.-based energy assets. In 2019, IKAV acquired BP plc’s San Juan gas assets, which are in Colorado and New Mexico and comprise over 650,000 acres, producing around 600 mmcfe/d.