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 yesterday. The companybought 90 Bcf of proven gas reserves in the Sacramento Basin fromVintage Petroleum for $71.5 million. The transaction will makeCalpine the largest gas producer in the basin, raising itsproduction to 43 MMcf/d. The Vintage reserves currently produce14.3 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 purchaseyesterday. It bought producing properties and facilities in theVentura basin of Southern California from Nuevo Energy for $29.6million in cash.

In a separate sales transaction yesterday 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%.

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