CA-Based Calpine Acquires Canadian E&P Co.
In its second bite this year at Canadian reserves, San Jose, CA-based independent power producer Calpine Corp. announced Monday it will make a cash offer to acquire TriGas Exploration Inc., Calgary, Alberta, for C$156 million. The two companies jointly announced they have an agreement that has the "unanimous support" of both companies' boards.
Calpine has a proposed 250-MW natural gas-fired electric generation plant, Calgary Energy Centre, planned about 30 miles north of Calgary, the same area in which most of TriGas' holdings are located. It is anticipated that in excess of 30 MMcf/d of natural gas would be used to fuel the new merchant power plant, which is expected to begin operating in December 2002.
"The acquisition of TriGas would provide Calpine with natural gas reserves to fuel its Calgary facility, and a 26% interest in the East Crossfield Gas Plant, extensive pipelines and gathering systems and a significant undeveloped land base with excellent development potential," said Calpine in announcing agreement to pay C$3.20 per share of TriGas, a 28% premium over the company's C$2.51 closing price Friday on the Toronto Stock Exchange.
Assuming all Canadian and U.S. regulatory approvals are received, the deal would increase Calpine's natural gas portfolio to the equivalent of 480 Bcf overall, with an added equivalent of 152 Bcf coming from Canada. Calpine will pick up about 30 MMcf/d in the TriGas properties. TriGas' reserves are "substantially all natural gas and associated natural gas liquids, representing a significant strategic asset for Calpine," the company said.
Almost all of the TriGas operations are located in the Acme/Irricana/Lonepine areas of Alberta, 30 miles north of Calgary, the same area in which Calpine's proposed power plant is slated to be located. In July, Calpine acquired gas reserves equivalent to about 38 MMcf/d in Alberta when it bought Quintana Minerals Canada Corp. (NGI, Aug. 7, 2000). The production of those supplies is expected to increase to about 42 MMcf/d by the end of this year, a Calpine spokesperson said.
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