Calpine Boosts Stake in Sacramento Basin
San Jose, CA-based independent power producer Calpine Corp. made
a major investment in upstream gas supply for its current and
future gas-fired power plants in California. The company bought 90
Bcf of proven gas reserves in the Sacramento Basin from Vintage
Petroleum for $71.5 million. The transaction will make Calpine the
largest gas producer in the basin, raising its production to 43
MMcf/d. The Vintage reserves currently produce 14.3 MMcf/d.
"Vintage's long-life reserves will help lower fuel costs for
Calpine's northern California natural gas-fired plants," said Bill
Berligen, Calpine senior vice president.
As a result of this acquisition, Calpine will add the remaining
58% interest in the Rio Vista Gas Unit and certain deep rights to
its northern California gas portfolio. This new production will
utilize Calpine's extensive Sacramento Basin gas pipeline system.
Discovered in 1936 the field has been one of the largest and most
prolific in California. Calpine received a 42% interest through
last year's Sheridan Energy acquisition.
Vintage Petroleum also executed a large asset purchase last
week. It bought producing properties and facilities in the Ventura
basin of Southern California from Nuevo Energy for $29.6 million in
In a separate sales transaction last week with an undisclosed
buyer, Vintage sold certain royalty interests in Los Angeles
County, CA, for $8.2 million. These sales are expected to result in
after- tax gains totaling $28 million, or $0.43 a share, a portion
of which was used to purchase the properties from Nuevo. The
remaining proceeds will be used to reduce Vintage debt.
Vintage has realized $88 million from divestitures since
beginning its sell-off program in second quarter1999. The company
plans to continue to identify and sell $30 million to $55 million
of non-strategic property interests by year-end to aid in achieving
its goal of lowering its debt-to-book capitalization ratio to the
low-to-mid 50% range. After utilizing proceeds from the current
sales, it debt-to-book capitalization ratio is expected to be 60%.
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.