Ontario Teachers’ Pension Plan’s recently formed natural resources group has completed its first energy asset transaction with the purchase of a stake in the Weyburn Unit, a Saskatchewan oil asset.
Teachers’ purchased a 4.9% interest in the Weyburn Unit for $153.4 million. The unit, in operation since 1963, produced approximately 25,000 barrels of crude oil per day in 2012. A press release from Teachers’ says the operation features long-life reserves, a predictable production profile and free cash-flow generation—all attributes the natural resources group is seeking for its portfolio.
Teachers’ natural resources group aims to combine the plan’s financial exposure to commodities with direct physical investments in natural resource production assets. The group seeks to provide Teachers’ with superior risk-adjusted returns, diversification and protection against adverse macroeconomic environments that could lead to unexpectedly high inflation. In addition to the current physical investments, which include timberlands and Canadian oil and gas assets, potential opportunities also include agriculture and mining.