Calpine

(CPN)

is selling all of its domestic oil and gas exploration and production assets in a transaction valued at $1.05 billion.

The power company expects to close the sale July 7.

The assets will be taken over by Rosetta Resources, a newly formed indirect, wholly owned unit of Calpine. Rosetta will issue 45.3 million common shares for $725 million. Rosetta will then use the net proceeds from the stock sale, along with $325 million from a new credit facility, to buy Calpine's domestic oil and gas assets.

As of May 1, Calpine's proved oil and gas reserves totaled 383 billion cubic feet equivalent. Following the transaction, Calpine will no longer own any interest in Rosetta.

Shares of Calpine were up 17 cents to $3.77 in trading before the opening bell.