Calpine Might Sell Its U.S. Gas Supplies

Troubled power merchant Calpine Corp. said Tuesday that it might sell its remaining natural gas supplies in the U.S. to raise more cash and reassure investors who are worried that the company will drown in its debt.

The natural gas reserves are in Sacramento, south Texas, the Gulf of Mexico, Colorado and Utah. The reserves total about 389 billion cubic feet.

The San Jose-based company owns or leases 92 power plants, including 73 that rely on natural gas.

Selling its natural gas holdings would force Calpine to buy more supplies on the spot market, a factor that could expose it to higher costs in the future.

It makes sense for Calpine to sell because natural gas prices are high and the company needs the money to lighten its debt load, said Christopher Ellinghaus of Williams Capital Group. He estimates Calpine’s natural gas reserves will bring $850 million to $1 billion, which could be used to repay some of the $18.1 billion in debt weighing on the company and pare its annual interest expenses by $120 million to $150 million.