Canada Pension Plan commits $450M to U.S. mineral, energy royalty sector

The company will focus on three key basins: the Mid-Continent Basin, Permian Basin and Denver-Julesburg Basin

pensionCanada Pension Plan Investment Board (CPPIB) announced today that its wholly owned affiliates committed US$450 million to LongPoint Minerals, LLC, a company focused on the acquisition of oil and natural gas mineral and royalty interests in the U.S.

The CPPIB is a Canadian Crown corporation established in 1997 to oversee and invest the funds contributed to and held by the Canada Pension Plan (CPP).

As of March 31 the CPPIB manages over $278 billion in investment assets for the Canada Pension Plan on behalf of 18 million Canadians.

The initial commitment, which is expected to be deployed over a two-to-three-year period, represents a significant majority ownership stake in LongPoint.

“Our multi-year commitment represents an attractive entry into the mineral interest and royalty sector. In owning royalty interests, we are able to participate in production revenues without the burden of associated capital or operating costs,” said Adam Vigna, Managing Director, Head of Principal Credit Investments, CPPIB.

Based in Denver, Colorado, LongPoint will acquire oil and natural gas mineral and royalty interests in the lower 48 states of the U.S.

“We’ve partnered with LongPoint given management’s deep knowledge of these basin areas and successful proven track record spanning over 30 years of collective expertise,” said Vigna.

Initially, the company will focus on three key basins: the Mid-Continent Basin, Permian Basin and Denver-Julesburg Basin.

Mineral and royalty interests provide revenue from production without an obligation for the associated capital or operating costs, and are typically held in perpetuity by the owner.

LongPoint will seek to acquire mineral and royalty interests with both current cash flow and growth via development of undrilled locations.

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