Calpine Evaluates Sales of Canadian Gas Assets

As part of its program to further enhance liquidity, Calpine Corporation is evaluating the sale of its natural gas reserves located in Alberta, Canada. These reserves currently represent approximately 230 billion cubic feet equivalent (bcfe) of proved reserves producing approximately 70 million cubic feet equivalent of gas per day. This evaluation will also include Calpine's 25% interest in approximately 80 bcfe of proved reserves (net of royalties) owned by the Calpine Natural Gas Trust. In addition, the company is evaluating the sale of certain unidentified U.S. natural gas reserves.

Related to this potential sale of gas reserves, Calpine is currently working on the restructuring of certain of its power contracts from a fixed price arrangement to a capacity and variable energy agreement. Calpine has retained Waterous & Co. to act as its advisor for the sale of the Canadian gas reserves.

"Our equity gas reserves have provided us with an attractive hedge to our fixed price contract portfolio. With a restructuring of certain of our fixed price power contracts and the potential sale of these natural gas reserves, we not only enhance our liquidity position, but we also expect to preserve the margin of our power contracts," stated Bob Kelly, Calpine chief financial officer.

Net proceeds from any sale of the gas reserves would be used to repay the existing $500 million first lien indebtedness with remaining proceeds to be used in accordance with the asset sale provisions of Calpine's existing bond indentures. Following the repayment of its existing first lien indebtedness, Calpine would have the ability under its existing bond indentures to issue up to approximately $700 million of new first lien debt.

Our Privacy Pledge

Most Popular Articles

Brent Crude Oil : $49.71/BBL 1.50%
Light Crude Oil : $48.7/BBL 2.05%
Natural Gas : $3.11/MMBtu 12.68%
Updated in last 24 hours