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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This Unlikely Spot Just Got $465 Million in Oil Investment

We're not hearing a lot these days about investment in new petroleum projects.

West Texas Intermediate oil prices are once again testing $45. And natgas prices in places like the U.S. are still hovering near decade lows. Meaning that most producers and financial backers are laying off plans for acquisitions and drilling.

But one place bucked that trend last week. Receiving a big cash injection from some of the biggest investors in the energy sector.

That's the Western Canadian Sedimentary Basin. Related: Why The World Needs Both Shale And Tar Sands

Energy private equity giant Riverstone Holdings announced last Wednesday that it will commit funds to a new venture in this area. Namely, private E&P firm CanEra Inc.

Riverstone--in concert with a syndicate of PE investors, and the management team of CanEra--will reportedly commit $465 million in total funding for the company. Representing a very significant investment, especially amid the current down market for energy.

The investors gave little detail on what opportunities are attracting them here. Saying only that CanEra will be based in Calgary, and will target opportunities in Canada.

The biggest selling point may be the company's management team. Which has already completed two Riverstone-backed ventures--CanEra I and CanEra II--in western Canada. The last of which was sold to Canadian producer Crescent Point for $750 million in early 2014. Related: Alberta One Of Hardest Hit By Lower Oil Prices

That firm focused on development of the Torquay Formation--an oil-rich package of rocks that lies below the prolific Bakken fields, in the eastern Canadian Basin. So it's possible we may see the new CanEra return to these stomping grounds.

Whatever the case, it's encouraging to see money coming into the E&P sector. And notably interesting that big buyers are paying close attention to Canada--a place that's been almost completely off the map for many American investors.

Watch for more news on the exact project direction that CanEra takes--and results from this company, that may confirm the opportunity that appears to be unfolding across Canadian oil and gas fields.

Here's to going where others don't,

Dave Forest

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