Investment Firms Purchase Oil Company Aera Energy

By the edhat staff

Two investment firms have acquired local oil and gas production company Aera Energy for an estimated $4 billion. 

Canadian pension fund CPP Investments joined a German asset management company IKAV announced the acquisition of the Bakersfield-based company last week. 

Aera Energy largest production is located in the San Joaquin Valley but also has oil field operations in Ventura, Monterey, Fresno counties and the East Cat Canyon oilfield in northern Santa Barbara County. The company withdrew its land-use permit to redevelop East Cat Canyon in 2020.

In September 2022, IKAV announced plans to acquire Aera Energy. CPP Investments agreed to purchase 49% of Aera Energy from IKAV. Created as a joint venture between Shell and ExxonMobil, Aera Energy is California’s second-largest oil and gas producer and accounts for nearly 25% of the state’s production.

In a press release from IKAV and CPP Investments, the companies stated they recognize that meeting the complex challenge of climate change will require “innovation across the global economy at a significant scale.” They further stated the intent to help Aera balance its energy transition efforts with the need to meet California’s 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,” the press release stated.

Bruce Hogg, Managing Director and Head of Sustainable Energies at CPP Investments, stated the investment into Aera will help California transition to geen energy supplies and deliver long-term risk-adjusted returns. 

“CPP Investments believes that enabling emissions reduction and business transformation in the energy sector can drive strong returns for long-term investors as part of the whole economy transition, and partnering with a like-minded investor like IKAV presents an excellent opportunity to put that decarbonization investment approach into action,” said Hogg.

Aera Energy President and CEO Erik Bartsch expressed excitement about the joint ownership. 

“It tells us they believe in the need to meet the energy needs of Californians for decades to come and are confident in our ability to deliver innovative solutions that will help the state meet its bold climate goals. Aera will continue to power the California economy and live our values of exceptional care for people and the environment. We also remain committed to the principles that make us an employer of choice and a valued partner in the communities where we live and work,” Bartsch said.

Aera Energy was sued in 2001 by a farm in Kern County for allegedly allowing 600 million barrels of oil wastewater to seek into the subsurface aquifers of the farm after putting oil drilling waste into a mile of unline percolation ponds. After several appeals and a new trial, Aera Energy was found liable and ordered to pay $9 million to Starrh Farms.

The oil company has also filed a lawsuit against the State of California after 49 of its fracking permit applications were denied due to climate change concerns.