CPPIB-Backed Wolf Said Near Devon Canadian Pipeline Deal

Updated on
  • Transaction could value 50 percent stake at $1.5 billion
  • Deal could be the third for CPPIB-backed energy companies

Wolf Infrastructure Inc., the midstream oil and gas company backed by Canada Pension Plan Investment Board, is nearing a deal to buy Devon Energy Corp.’s 50 percent stake in the Access Pipeline in Western Canada, according to people familiar with the matter.

The deal is said to value Devon’s stake in the Access Pipeline at as much as C$1.5 billion ($1.2 billion) and could be announced as early as this week, said the people who asked not to be identified because the matter is private. Talks are still ongoing and a deal may not be reached, the people said.

Devon rose 6.5 percent to $40.12 a share as of 12:12 p.m. in New York, giving the company a market value of about $21 billion.

Devon’s partner in the Access Pipeline, Calgary-based MEG Energy Corp., is also trying to find a buyer for its 50 percent stake.

Spokesmen for Canada Pension and Devon declined to comment, as did Wolf President Bob Pritchard.

Oklahoma City-based Devon is targeting asset sales of $3 billion to fund drilling and lower debt. Last month, the company agreed to sell fields in Texas and Oklahoma and a royalty interest in northern Midland Basin for almost $1 billion.

The purchase of Devon’s stake would be the first for Calgary-based Wolf Infrastructure since it was launched last September. Wolf, which is backed by Canada Pension, the country’s largest pension plan, was established to target midstream energy assets in Western Canada, the companies said at the time.

It would also mark the third purchase in a month for Canada Pension-backed companies in Western Canada as oil and gas companies look to shore up their balance sheets amid the current commodities price rout.  

Last week, Seven Generations Energy Ltd., in which Canada Pension has a 16 percent stake, agreed to buy Alberta shale assets from Paramount Resources Ltd. for C$1.3 billion.  

That purchase followed on the heels of Canada Pension-backed Teine Energy Ltd. agreeing to buy oil-producing properties from Penn West Petroleum Ltd. for C$975 million.

(Updates with share price from third paragraph.)
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