Perhaps countering some current trends among other United States energy interests, San Jose, CA-based Calpine Corp. talked bullishly Thursday about Canadian energy prospects. An income fund tied to the power plant developer/operator’s Canadian projects spewed more than $12 million in cash for the first quarter, and separately a Calpine Canadian official indicated the company intends to take a bigger stake in Canadian natural gas properties longer term.

While specifically noting the company has no current purchases in the works, a Calgary-based Calpiine spokesperson said the company — unlike other U.S. firms — has no plans to sell its western Canadian natural gas interests, and longer term, will be looking to buy more.

Separately, Calpine announced the first quarter results for its Calpine Power Income Fund, which is tied to the operations of several natural gas-fired power plants in Canada. The income fund declared more than $12 million in distributable cash, or 23.5 cents/trust unit (share), and additionally, in February, unit-holders received a special $900,000, or 1.65 cents/trust unit, distribution, due to what Calpine called “excess cash generated by our assets during 2002.”

Calpine describes its income fund as “an unincorporated open-ended trust established under the laws of Alberta, Canada.” The fund indirectly owns interests in the Island Cogen Facility in British Columbia and the Calgary Energy Facility in Alberta, along with an economic interest in the Whitby Cogen Facility in Ontario through a participating loan the company says “mirrors the cash flow from the facility.”

“During the past eight months since the Fund’s inception, we have maintained our commitment to create an investment opportunity that provides investors with a stable, growing cash flow.” said Rohn Crabtree, CEO of Calpine Canada Power Ltd, the manager of the income fund. “As evidenced by the special distribution, the Fund has been successful in realizing additional value for unit-holders. This opportunity to present unit-holders with a special distribution is attributable to our ability to optimize the output of these highly efficient plants through the management and operational expertise of our sponsor, Calpine Corporation.”

Earlier this month a Lehman Brothers energy analyst examined the rhetorical question, “Is Western Canada losing its luster?” The conclusion was yes, based on the assessment that a “large number of companies are de-emphasizing Western Canada” because of perceived disappointment with Canadian drilling returns and the Royalty Trust sector’s inability to pay premium values.

“Perhaps a more generalized conclusion is that drilling economics for natural gas in Western Canada are deteriorating and several of the exploration/production companies are indicating by their actions that they believe that they can make better returns elsewhere,” wrote Lehman Brothers’ Thomas Driscoll, who said this added to potential opportunity (for buyers) and risk (for existing E&Ps).

Calpine is undeterred by this type of assessment right now, according to a company Canadian spokesperson in a brief intervew Thursday with Power Market Today. The spokesperson was not aware of the Lehman Brothers assessment.

“Calpine Canadian natural gas operations are now in a position of strategic growth, although we have no specific new projects under way right now,” the spokesperson said. “Presently, we’re in a period of stabilization, and we have no plans to retrench from Canada at all.”

One industry observor pointed out that the companies de-emphasizing Canadian operations are the exploration-directed ones spending a lot of exploration dollars and looking for big-ticket discoveries. Typically, as those companies move on to greener exploration targets, more low-cost, development-oriented companies move in for profitable infill projects.

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