Calpine to Buy More Natural Gas Reserves

California power producer Calpine Corp. on Tuesday agreed to buy 236 billion cubic feet of natural gas reserves in Texas and New Mexico for $355 million in cash and $49.5 million in assumed debt to boost reserves of the fuel it uses to generate electricity.

San Jose-based Calpine agreed to purchase 35 wells that produce 6 million cubic feet of gas a day in New Mexico’s San Juan Basin from closely held Bayless Cos.

It also agreed to buy a majority interest in Houston-based Michael Petroleum, which produces 43 million cubic feet of gas a day in south Texas, from Carrizo Oil & Gas Inc.

The purchases increase Calpine’s gas reserves to about 1.5 trillion cubic feet, spokeswoman Katherine Potter said.

The company, a large seller of electricity in California, has been buying gas reserves to protect itself from price increases. The average price of California gas has more than tripled so far this year from a year ago.

Potter declined to comment on the price of each transaction or to provide other details.

Calpine has bought three Canadian gas producers in the last nine months. It agreed in February to buy Encal Energy Ltd. for about $1 billion in stock, more than doubling its gas reserves.

In November, it bought TriGas Exploration Inc. for $103 million. In January, it bought closely held Quintana Minerals Canada Corp. for $97.6 million.

Calpine said in April it’s considering buying gas-producing properties in western Canada and offshore Nova Scotia.

With the purchases, Calpine is meeting its goal of owning 25% of the gas it needs to produce electricity, the company said. Calpine is running or constructing enough power plants to light about 41.2 million U.S. homes.

It expects to supply energy to 70 million homes by the end of 2005, the company said.

Shares of Calpine rose $1.39 to close at $45.34 on the New York Stock Exchange. They have risen 30% in the last year.