By an OGJ Online Correspondent
CALGARY, Feb. 8�Electricity producer Calpine Corp., San Jose, Calif., plans to acquire all the common shares of Encal Energy Ltd., a Calgary-based exploration company, in a stock-for-stock exchange worth about $1.2 billion (US), including Encal debt.
The California company said it will gain about 1 tcf equivalent of proved and probable natural gas reserves, net of royalties. It said the deal will also give it access to firm gas transportation capacity from western Canada to California and the eastern US, and an accomplished management team to lead Calpine expansion in Canada.
Encal currently produces about 230 MMcfd of gas equivalent, net of royalties.
Calpine said the acquisition will increase the company�s net production to 390 MMcfd of gas equivalent in North America. It said gas production under Calpine�s control will be sufficient to fuel about 2,300 Mw of its power fleet. On completion of the deal, Calpine�s proved and probable reserves will be 1.7 tcf equivalent, net of royalties. Most of Encal�s reserves are natural gas and gas liquids.
Calpine Pres. and CEO Peter Cartwright said Encal�s properties are an excellent fit with Calpine�s gas-fired electric generating assets, especially in California and the central US. He said the acquisition will give Calpine an opportunity to increase its margins through reduced fuel costs.
Under the terms of a definitive agreement, Encal shareholders will receive $12/share (Can.) in Calpine common equivalent shares.
The deal is subject to approval by Encal shareholders and regulatory and court approvals, and is expected to close in the second quarter 2001. Holders of about 34% of fully diluted Encal shares have agreed to vote in favor of the deal.
