Cenovus announced in June that it was in talks to sell Heritage Royalty Limited Partners, which holds its portfolio of oil and gas royalties in Manitoba, Saskatchewan and Alberta.
In a news release Tuesday, Cenovus said it had considered several alternatives to raise cash from Heritage Royalty, including an initial public offering, before agreeing to sell to the pension plan.
OTPP, which manages $154.5 billion in net assets as of Dec. 31, 2014, created a Natural Resources Group in 2012 to manage assets such as agricultural lands, forests and oil and gas lands.
The pension plan regards properties wil a regular return as good alternatives to provide revenue for the plan.
"This acquisition provides an attractive risk-return valuation and complements our investment approach, which is shifting to more direct and diversified energy sector holdings," said Ziad Hindo, OTPP senior vice-president.
Heritage Royalty had revenues of approximately $320 million in 2014 based on average production of approximately 14,800 barrels of oil equivalent per day.
Calgary-based Cenovus owns about 4.8 million acres of lands, including the Pelican Lake oilsands operation and Weyburn conventional oil properties. Cenovus leases the land from Heritage.
By spinning off its royalty properties, the energy company gets a supply of cash and improves its debt to capitalization ratio.