Calpine Corp. to acquire Encal Energy Ltd. for 4.96 times revenue, The

Weekly Corporate Growth Report, Feb 19, 2001

The Deal: The Calpine Corp. has agreed to purchase Encal Energy Ltd. for $869 million in stock. According to the terms of the deal, Calpine will also assume $331 million in Encal debt. The acquisition makes Calpine a significantly more visible player in the North American natural-gas market. After the news of the transaction was announced, shares of Calpine rose $3.43 to $45.50, while Encal shares slipped 39 cents to close at $7.80.

Discussion: Encal Energy Ltd. explores for oil and gas in the Western Canada Sedimentary Basin in Alberta and northeastern British Columbia. Encal Energy, which concentrates on natural gas and light oil projects, has proved reserves of 39.2 million barrels of oil and natural gas liquids and 568.9 billion cu. ft. of natural gas. Encal is one of western Canada's top producers.

The Calpine Corp. is an independent power producer that is the world's top geothermal producer. The company owns 19 of the 21 power plants at the largest geothermal facility in the United States, The Geysers, in northern California. Calpine has a net generating capacity of more than 1,000 MW from geothermal power plants. Natural gas, however, is the company's main power source: Calpine controls about 10,000 MW of generating capacity through its interests in gas-fired power plants in the United States and Canada. In addition, the company has about 700 billion cu. ft. equivalent of proved natural gas reserves.