CPPIB Credit Investments Inc. is investing $570 million in U.S.-based LongPoint Minerals.
The investment by the Canada Pension Plan Investment Board subsidiary will occur over two to three years and will make the pension fund a majority shareholder in the Denver-based oil and gas mineral and royalty interest company.
“In owning royalty interests, we are able to participate in production revenues without the burden of associated capital or operating costs,” Adam Vigna, managing director and head of principal credit investments, said in a release.
LongPoint Minerals primarily focuses on acquiring oil and natural gas mineral and royalty interests in the Anadarko basin in Oklahoma, Texas, Kansas and Colorado; the Permian basin in Texas and New Mexico; and the Denver-Julesburg basin in Colorado, Wyoming, Nebraska and Kansas.
Read: Canadian pension funds rank poorly on climate change
The latest investment in the oil and gas sector follows a report last month found that Canadian pension funds don’t hold their own against their global peers in terms of managing climate change risk.
The report by the Asset Owners Disclosure Project classified the CPPIB as a learner, rather than a leader or a laggard, in terms of climate change risk. The pension fund, however, took issue with the findings. “This report doesn’t come close to representing all that CPPIB is doing to manage this risk,” Michel Leduc, head of public affairs at the CPPIB, told The Globe and Mail.
Read: Should institutional investors divest from carbon?