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Natural gas pipeline.PETR JOSEK/Reuters

On the face of it, Canada Pension Plan Investment Board's decision in 2010 to take a $350-million stake in Progress Energy Resources wasn't looking too good -- until Thursday.

The stock closed Wednesday at $11.55 a share, below the $12.60 that CPPIB had paid for its position. The announcement early Thursday that Malaysia's Petronas is buying Progress for $20.45 a share means a 62 per cent gain for the pension fund manager on the position in just over two years -- at a time when natural gas prices have been awful. (That wasn't a big issue, as CPPIB also hedged out the commodity risk, adding to returns, according to people who know the deal.)

CPPIB's position in Progress was the first significant foray of the fund's new relationship investing strategy. CPPIB took a stake -- now equivalent to 16 per cent -- as part of a big fundraising that gave Progress the money to make an acquisition of natural-gas rich lands that Suncor Energy was shedding.

That turned Progress from a promising company to one with a pretty dominant landholding in a very strategic spot: northeastern British Columbia. In the old world, where natural gas went east and south, gas from that area would be the furthest from market. In a new world, where Asian countries were eyeing Canada as a source of liquefied natural gas that could be shipped from Canada's Pacific Coast, B.C. gas would be first in line.

Still, there was talk that CPPIB had overpaid for its position in Progress, with some critics saying that the big pension fund manager from out east had been snookered in its first really big move in the energy patch. Thursday's deal should quiet any remaining such speculation.