HomeWorld RegionsNorth AmericaCalpine Sells Canadian Energy Assets for $81 Mln

Calpine Sells Canadian Energy Assets for $81 Mln

August 30 2002 – Independent power producer Calpine Corp. on Thursday said it agreed to sell Canadian oil and gas properties for $81 million to NAL Resources, enabling Calpine to improve its cash position in the wake of a credit crunch prompted by Enron Corp.’s collapse.

Under the terms of the agreement, San Jose, California-based Calpine said about 42 per cent of the sale is subject to rights of first refusal, which expire on Sept. 28. The balance of the deal is expected to close on Aug. 30.

NAL Resources struck the deal on behalf of Calgary-based NAL Oil & Gas Trust and another institutional investor, according to Calpine.

The properties, which Calpine considers to be non-strategic, are located in central Alberta and represent about 60 billion cubic feet of gas equivalent of net proved reserves, with current net production of about 19 million cubic feet of gas equivalent a day.

“While we continue to evaluate opportunities for the sale of other non-strategic assets, Calpine Natural Gas remains an active participant in the North American natural gas and power markets,” said Calpine Chief Financial Officer Bob Kelly in a statement.

In addition to the industrywide cash crunch stemming from Enron’s bankruptcy, Calpine has suffered from weak prices for the electricity it produces. Spark spreads, an indicator of the profitability of making electricity from natural gas, have fallen well below its most pessimistic forecast, the company said earlier this month.

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