Subject: fyi - calpine announces new texas power sales contracts ;
earningsvisibili ty enhanced
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from : stein , neil [ mailto : neil . stein @ csfb . com ]
sent : wednesday , july 18 , 2001 12 : 31 pm
to : undisclosed - recipients
subject : cpn : announces new texas power sales contracts ;
earningsvisibili ty enhanced
good afternoon :
attached , please find our recent fc note on calpine .
>
summary
1 ) we reiterate our strong buy rating on calpine . over the last 2 days , the
company has announced a number of significant power sales agreements
associated with its texas capacity .
2 ) on july 17 , cpn announced that it had entered into 2 agreements with
reliant energy services to provide 1 , 000 mw of power over a 5 year period .
on july 18 , cpn announced an agreement with shell oil to provide up to 3 , 000
mw of power , also over a 5 year period . all the contracts commence on
january 1 , 2002 , which coincides with the beginning of retail competition in
texas .
3 ) other details relating to pricing and contract structure were not
disclosed .
4 ) in texas , cpn currently owns 2 , 337 mw capacity in operation , 3 , 786 mw
under construction and 1 , 007 mw under development .
5 ) importantly , as a result of these announcements and other recent
agreements , calpine ' s texas capacity is now 85 % sold forward for the next 2
years . overall , this hedged position gives us additional comfort in cpn ' s
ability to meet or exceed our 2001 - 2003 eps estimates of $ 1 . 94 , $ 2 . 35 and
$ 3 . 08 , respectively .
6 ) some investors have expressed concern about calpine ' s exposure to
potential overbuilding in the texas market . cpn ' s recent contract
announcements should reassure investors that the company is actively taking
steps to manage and minimize its market price risk in this region .
regards ,
neil stein 212 / 325 - 4217
bryan sifert 212 / 325 - 3906
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