San Jose, CA-based independent power producer Calpine Corp. madea major investment in upstream gas supply for its current andfuture gas-fired power plants in California. The company bought 90Bcf of proven gas reserves in the Sacramento Basin from VintagePetroleum for $71.5 million. The transaction will make Calpine thelargest gas producer in the basin, raising its production to 43MMcf/d. The Vintage reserves currently produce 14.3 MMcf/d.

“Vintage’s long-life reserves will help lower fuel costs forCalpine’s northern California natural gas-fired plants,” said BillBerligen, Calpine senior vice president.

As a result of this acquisition, Calpine will add the remaining58% interest in the Rio Vista Gas Unit and certain deep rights toits northern California gas portfolio. This new production willutilize Calpine’s extensive Sacramento Basin gas pipeline system.Discovered in 1936 the field has been one of the largest and mostprolific in California. Calpine received a 42% interest throughlast year’s Sheridan Energy acquisition.

Vintage Petroleum also executed a large asset purchase lastweek. It bought producing properties and facilities in the Venturabasin of Southern California from Nuevo Energy for $29.6 million incash.

In a separate sales transaction last week with an undisclosedbuyer, Vintage sold certain royalty interests in Los AngelesCounty, CA, for $8.2 million. These sales are expected to result inafter- tax gains totaling $28 million, or $0.43 a share, a portionof which was used to purchase the properties from Nuevo. Theremaining proceeds will be used to reduce Vintage debt.

Vintage has realized $88 million from divestitures sincebeginning its sell-off program in second quarter1999. The companyplans to continue to identify and sell $30 million to $55 millionof non-strategic property interests by year-end to aid in achievingits goal of lowering its debt-to-book capitalization ratio to thelow-to-mid 50% range. After utilizing proceeds from the currentsales, it debt-to-book capitalization ratio is expected to be 60%.

Rocco Canonica

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