Calpine plans to acquire Encal for $1.2 billion

Calpine Corporation plans to acquire all of the common shares of Encal Energy, a Calgary, Alberta-based natural gas and petroleum exploration and development company, through a stock-for-stock exchange. The aggregate value of the transaction is approximately US$1.2 billion, including the assumed net indebtedness of Encal.

Upon completion of the acquisition, Calpine will gain approximately 1.0 trillion cubic feet equivalent of proved and probable natural gas reserves, net of royalties. This transaction also provides access to firm gas transportation capacity from western Canada to California and the eastern US.

Encal's assets currently produce approximately 230 million cubic feet of gas equivalent (mmcfe) per day, net of royalties. The company's reserves, which are primarily natural gas and associated natural gas liquids, represent a significant strategic addition to Calpine's natural gas portfolio.

This acquisition will increase Calpine's net production to 390 mmcfe per day in North America. Upon completion of the acquisition, Calpine's proved and probable reserves will be 1.7 trillion cubic feet equivalent, net of royalties.

Under the terms of the definitive agreement, Encal shareholders will receive Cdn$12.00 per share in Calpine common equivalent shares based on an exchange ratio to be determined prior to closing. The transaction is expected to be accounted for as a pooling-of-interests.

It is anticipated that the transaction will be approximately $0.20 accretive to earnings per share in 2001 and 2002. The transaction is subject to approval by the shareholders of Encal, as well as court and regulatory approvals, and is expected to close in the second quarter of 2001. Holders of approximately 34 percent of the fully diluted Encal shares have agreed to vote in favour of the transaction.