Transactions - JULY 12, 2017

CPPIB acquires 45% stake in Irish natural gas field

by Jody Barhanovich

The C$316.7 billion ($247 billion) Canada Pension Plan Investment Board has acquired Shell Exploration Company B.V.’s 45 percent stake in Ireland’s Corrib Natural Gas Field for €830 million ($948 million).

CPPIB entered a strategic partnership with Vermilion Energy Inc., an international energy producer, for the acquisition. CPPIB agreed, through its subsidiary CPP Investment Board Europe, to buy 100 percent of Shell E&P Ireland Limited, which holds Shell’s 45 percent interest in Corrib, for €830 million ($948 million) plus future contingent value payments.

The acquisition will go into effect on Jan. 1, 2017, with closing anticipated in the first half of 2018. Vermilion will operate the assets after completion of the acquisition.

Following the transfer to Vermilion, CPPIB would hold a 43.5 percent non-operated interest ownership in Corrib, Vermilion would hold a 20 percent operated interest and Statoil ASA would continue to hold a 36.5 percent non-operated interest.

At closing, Vermilion will assume operatorship, and CPPIB plans to transfer SEPIL along with a 1.5 percent working interest to Vermilion for €19.4 million ($22.15 million).

Corrib is located 83 kilometers off the northwest coast of Ireland. The field has a gross plant capacity of approximately 350 million cubic feet of natural gas per day, provides approximately 60 percent of Ireland’s natural gas consumption and constitutes approximately 95 percent of Ireland’s gas production.

“Ireland is an attractive destination for a long-term investor like CPPIB, and through this investment in the Corrib gas field, we are able to further our strategy of investing in high-quality natural resources assets alongside highly regarded and experienced operating partners such as Vermilion,” said Avik Dey, managing director and head of natural resources at CPPIB.

The acquisition would significantly increase Vermilion’s degree of operating control of its asset base. Following the assumption of operatorship of Corrib, Vermilion estimates it will operate 87 percent of its production base as compared to 72 percent currently.

CPPIB’s natural resources group focuses on direct private investments in the oil and gas, energy midstream, power and renewables, and metals and mining industries. As of March 31, 2017, CPPIB’s natural resources portfolio consisted of nine direct investments valued at C$4.3 billion ($3.35 billion).


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