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Exhibit 10.4
 
PARTIAL TRANSFER AND RELEASE AGREEMENT

This Partial Transfer and Release Agreement (this “Agreement”) entered into this
3rd day of August, 2007, is made by and among those parties to a certain
purchase and sale agreement, transfer and assumption agreement, and all other
interrelated agreements thereto, executed July 7, 2005  (collectively, the
“PSA”), namely, Calpine Gas Holdings LLC, CPN Pipeline Company, Calpine
Corporation, Calpine Producer Services, L.P., Calpine Fuels Corporation and
their subsidiaries and affiliates, as applicable (collectively, “Calpine”), on
the one hand, and Rosetta Resources Inc., Rosetta Resources Operating LP
(individually and as successor by merger with Rosetta Resources California, LLC;
Rosetta Resources Rockies, LLC; Rosetta Resources Texas GP, LLC; Rosetta
Resources Texas LP, LLC; and Rosetta Resources Texas LP) and Rosetta Resources
Offshore, LLC and their subsidiaries and affiliates, as applicable
(collectively, “Rosetta”), on the other hand.  Calpine and Rosetta are sometimes
referred to collectively as the “Parties” and individually as a “Party.”

RECITALS

A.           The PSA provided for the sale to Rosetta of ultimate ownership and
control of all or substantially all of the assets comprising Calpine’s oil and
gas business (the “Sale Transaction”).

B.           Among the properties to be transferred pursuant to the PSA were the
properties listed on Exhibit A attached hereto (collectively, the “Properties”).

C.           On or about December 20, 2005 (the “Commencement Date”), Calpine
filed petitions for relief under chapter 11 of the title 11 of the United States
Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”).  Calpine’s chapter 11
cases are being jointly administered under Case No. 05-60200-brl (the “Chapter
11 Cases”).

D.           Because of the Chapter 11 Cases, certain issues remain open with
respect to the PSA, and a number of disputes have arisen between the
Parties.  Among other things, there are open issues with respect to the status
of legal title to the Properties as of the Commencement Date.

E.           The Parties have reached an interim business solution in connection
with the Properties for certain, but not all, of the outstanding disputes on the
basis set forth in detail in this Agreement.

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AGREEMENT

NOW THEREFORE, for valuable consideration as exchanged between Calpine and
Rosetta in this Agreement, the Parties agree:

1.             New Marketing Agreement.  Contemporaneously with the execution of
this Agreement, each Party agrees to execute, and deliver its respective
counterparts of, the New Marketing Agreement attached hereto as Exhibit B (the
“New Marketing Agreement”), which, among other provisions, extends the primary
term for Calpine’s provision of marketing services for Rosetta until the earlier
of: (i) June 30, 2009; or (ii) the date Calpine receives written notice from
Rosetta of immediate expiration of the New Marketing Agreement on account of the
first to occur of the following: (a) the entry by a court of competent
jurisdiction of a final, nonappealable order avoiding the Sale Transaction as a
fraudulent or similar transfer; or (b) the Bankruptcy Court’s authorizing
Calpine to reject the PSA in whole or in part, unless Rosetta obtains a stay of
the effect of such rejection order from a court of competent jurisdiction, in
which case, upon the entry of a final nonappealable order authorizing Calpine to
reject the PSA in whole or in part (and, in either case,Calpine exercising its
authority pursuant to any such rejection order).

2.             Resolution of Outstanding Property Issues.

(a)           Contemporaneously with the execution of this Agreement, each Party
agrees to execute, and deliver its respective counterparts of, all documents
attached as Exhibit C and also to complete, promptly following Rosetta’s
request, all necessary steps and actions and execute all other documents
required to convey to Rosetta (or, as applicable, to irrevocably establish in
Rosetta’s name) full legal title in and to (i) the Properties and (ii) all
operating rights possessed by Calpine related to the Properties, which
conveyances shall be effective, except as provided in Sections 5 and 6 hereof,
on and from the “Effective Date” (as defined by the PSA), free and clear of any
and all liens, claims and encumbrances arising on or after July 7, 2005 by,
through or under Calpine or its actions.  The Parties acknowledge and agree that
the Parties may be required to provide or execute additional documents with
respect to, and to complete, conveyance of the Properties to Rosetta as may be
reasonably requested by California State Lands Commission (“CSLC”), U.S.
Department of Interior, Minerals Management Service (“MMS”) or Bureau of Land
Management (“BLM”) (collectively, “Regulatory Authorities”) or Rosetta from time
to time which the Parties shall promptly execute (not later than ten (10) days
following their receipt).  A nonexclusive list of the documents required is set
forth in Exhibit C attached hereto.

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(b)           The Parties agree to take all reasonable steps necessary to obtain
acknowledgments from applicable Regulatory Authorities that such authorities
will recognize the applicable Rosetta entity as the record title owner and
operator of each of the Properties as of the Effective Date.

(c)           Following receipt of all required governmental approvals of the
transfer to Rosetta of legal title to the Properties, Rosetta agrees to aid and
assist Calpine to secure the release of any collateral security Calpine has
posted with respect to the Properties.  Rosetta agrees to execute and deliver to
Calpine all documents required with respect to such release for the items as set
forth in Exhibit D, copies of which have been provided to Rosetta, and also to
complete all necessary steps and actions and execute all other documents
required to secure the release of any collateral security Calpine has posted
with respect to the Properties.  The Parties acknowledge and agree that Rosetta
may be required to provide or execute additional documents to secure such
releases as may be reasonably requested by Calpine from time to time which the
Parties shall promptly execute (not later than ten (10) days following their
receipt).  A nonexclusive list of the documents required is set forth in Exhibit
D attached hereto.

3.             Assumption and Assignment of Contracts and Leases and Related
Liabilities.  Subject to Section 5(b), Calpine agrees to seek Bankruptcy Court
approval, as necessary, to assume pursuant to Section 365(b) of the Bankruptcy
Code and assign or otherwise convey to Rosetta in accordance with Section 2
hereof, any and all interest, title or rights Calpine has in or to the
Properties and any related operating rights, rights-of-ways, compensatory
royalty agreements, easements and leases pertaining to the Properties.  Rosetta
agrees to assume, effective as of the Assumption Date (as hereinafter defined),
all cure obligations (as provided in section 365(b)(1)(A) of the Bankruptcy
Code) in connection with any such assumption related to the Properties and to
pay, and indemnify Calpine for, such obligations which shall be set forth or, by
agreement of the Parties, otherwise provided for in the Bankruptcy Court order
approving such assumption.  To the extent Rosetta disputes any cure claims
asserted by any counterparties, Calpine agrees to reasonably cooperate in
defending against and opposing such asserted cure claims.  “Assumption Date”
shall mean: (i) for liabilities Rosetta assumed pursuant to the PSA, the
effective date of such assumption as provided in the PSA; and (ii) for
additional liabilities that Rosetta did not assume pursuant to the PSA but will
assume pursuant to this Agreement, the effective date of such assumption agreed
to by the applicable Regulatory Authority.  The Parties agree to use all
reasonable efforts to include in such Bankruptcy Court order any wording as may
be reasonably requested by the Regulatory Authorities or either Party, as
applicable, in order to effectuate the terms of this Agreement.

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4.             Assumption of Rights and Liabilities.

(a)           Effective as of the Assumption Date, Calpine agrees to assign, and
Rosetta agrees to assume, all rights, obligations, duties, benefits, burdens,
and claims of Calpine related to any underpayment or overpayment of monies,
revenue interests, royalties or other payment obligations to the State of
California, acting through the CSLC with respect to that portion of the
Properties for which CSLC approvals are outstanding (collectively, the “CSLC
Properties”), including without limitation: (i) the CSLC’s June 14, 2006 Audit
for PRC 415.1 alleging underpayment in the amount of $643,379.92, together with
any and all penalties and interest that have continued to accrue thereon; and
(ii) the right to pursue, negotiate, resolve, pay any underpayments, and retain
any overpayments for its own account with respect to all such CSLC Properties
from and after May 1, 2000.

(b)           Effective as of the Assumption Date, Rosetta agrees to: (i) assume
all of Calpine’s liabilities associated or arising in connection with the
operation or Calpine’s status as lessee of the Properties (including without
limitation plugging and abandonment costs and all of the liabilities for the
items listed on Exhibit D attached hereto); and (ii) comply with all applicable
governmental regulations associated with the Properties, including without
limitation maintaining a clean-up/spill response plan for operated MMS leases as
may be required by applicable law.

5.             Reservation of Rights.

(a)           Excepting the conveyance of title to the Properties and attendant
rights thereto, including without limitation operating rights, as specifically
provided herein, this Agreement is without prejudice to the Parties’ respective
rights, defenses, arguments, remedies, claims and obligations under the PSA and
applicable law.

(b)           The Parties reserve all rights to argue that any contracts or
leases associated with the Properties are real property
interests.  Notwithstanding the Agreement, nothing herein shall constitute an
admission by either Party (or impair its right to argue otherwise) that the
Bankruptcy Code mandates assumption and assignment of such leases.

6.             No Prejudice.  Notwithstanding any language herein to the
contrary, nothing in this Agreement including the effectiveness of the
conveyances of the Properties on the Effective Date set forth in Section 2
hereof shall prejudice, release or otherwise impair the respective rights,
defenses, arguments, remedies, claims, or offsets of either the Calpine chapter
11 debtors (or their estates) or Rosetta with respect to (a) any fraudulent
transfer action in connection with the Sale Transaction and defense thereto, (b)
any actions to assume or reject the PSA, whether in whole or in part, and any
defense or response thereto, including any claims for damages or rights of cure,
whichever the case may be, relating thereto; provided, however,Calpine
acknowledges and agrees that in the event it is authorized and exercises any
right to hereafter reject the PSA, such rejection shall not affect in any manner
Rosetta’s right, title and interest in and to the Properties, whether conveyed
pursuant to this Agreement or otherwise, or (c) in connection with those
remaining properties identified by Calpine as Section 365(d) leases in its
Motion to Assume filed in or about June 2006 with the Bankruptcy Court and not
listed on Exhibit A hereto.  Nothing herein shall impair or otherwise preclude
Rosetta from asserting its rights, defenses, arguments or remedies in seeking to
compel Calpine to assume or reject the PSA or Calpine from asserting any legal
rights, defenses, arguments, or remedies in response thereto.

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7.             Releases.

(a)           Except as otherwise provided in Section 6 and elsewhere herein
(including to the extent that Calpine is subject to any claim, or liability for
any claim, associated or arising in connection with the operation or Calpine’s
status as lessee of the Properties), Calpine hereby releases any claims, causes
of action, suits or demands that Calpine or its estate may have against Rosetta
and the Rosetta signatories hereto, together with their affiliates, officers,
directors, employees, agents, attorneys, and representatives, solely in
connection with Rosetta’s operation, management, or control of the
Properties.  For the avoidance of doubt and as set forth in Section 6 above, the
release in this Section 7(a) is not a release of any assumption or rejection
related rights under the PSA or any rights to prosecute any avoidance actions
under sections 544, 548, and 550 of the Bankruptcy Code with respect to the
entirety of the Sale Transaction under the PSA.

(b)           Except as otherwise provided in Section 6 and elsewhere herein
(including without limitation to the extent Calpine has liability with respect
to operating expenses, costs or other burdens of any ownership interest it
maintains in respect of any unitization involving any of the Properties),
Rosetta hereby releases any claims, causes of action, suits or demands that
Rosetta or its assignees or successors-in-interest may have against Calpine or
its affiliated chapter 11 debtors, together with their affiliates, officers,
directors, employees, agents, attorneys, and representatives, solely in
connection with Rosetta’s operation, management, or control of the
Properties.  For the avoidance of doubt and as set forth in Section 6 above, the
release in this Section 7(b) is not a release of any defenses, offsets, claims,
counterclaims, arguments, cure amounts or damages arising out of or in defense
to any assumption or rejection of the PSA or any avoidance actions under
sections 544, 548, and 550 of the Bankruptcy Code by Calpine, its affiliated
chapter 11 debtors, or their estates with respect to the entirety of the Sale
Transaction under the PSA.

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(c)           The Parties each acknowledge that they have been advised by their
respective legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

Each of the Parties, being aware of Section 1542, hereby expressly waives any
and all rights it may have thereunder, as well as under any other statutes or
common law principles of similar effect, with respect to the releases in this
Section 7.

8.             Subsequent Transfers.  During the pendency of the any avoidance
action, Rosetta agrees to provide Calpine five (5) business days’ advance
written notice of any transfer or sale of any of the Properties.

9.             Entire Agreement.  Except for the PSA, this Agreement is the
entire agreement between the Parties in respect of the subject matter hereof and
shall not be modified, altered, amended or vacated without the prior written
consent of all Parties hereto.  No statement made or action taken in the
negotiation of this Agreement may be used by any Party for any purpose
whatsoever.

10.           No Admissions; No Presumption Against Drafter.  This Agreement and
its contents are the result of negotiations by the Parties in an effort to
compromise on certain unresolved disputes.  Nothing herein shall be held to be
an admission against the interests of either Party or form the basis for waiver
or estoppel in connection with either Party’s legal rights, claims or defenses
associated with the properties not addressed by this Agreement.  Each Party has
cooperated in the drafting and preparation of this Agreement.  Hence, in any
construction to be made of this Agreement, the same shall not be construed
against any Party.

11.           Further Assurances.  Following the execution of this Agreement,
each Party is and shall be obligated to execute and deliver such other
certificates, agreements and other documents and take such other actions as may
be reasonably be requested, from time to time, by any of the other Parties in
order to consummate or implement to the fullest degree possible the transactions
and agreements contemplated by this Agreement.  Additionally, to the extent that
same relate to the Sales Transaction and are not included in the Bankruptcy
Court’s order, pursuant to Section 365(d) of the Bankruptcy Code, dated July 12,
2006 (the “365 Order”), Rosetta agrees to assist Calpine, following the Closing
Date (as defined in Section 23, supra), in Calpine’s efforts to secure release
of the collateral security as described in Exhibit E attached hereto by
providing records or copies of records and the use of the reasonable time of its
employees in support of this objective.

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12.           Recording Instruments.  Calpine authorizes Rosetta to file any and
all recording instruments, conveyances and documents required to confirm and
memorialize under applicable laws Rosetta’s legal interest and title in and to:
(i) the Properties; and (ii) any other properties transferred from Calpine to
Rosetta that were not listed in the 365 Order; as well as related agreements and
contracts that have been or are being conveyed to Rosetta; provided, however,
that Rosetta shall provide copies of such instruments, conveyances and documents
to Calpine, and the opportunity to comment on any instruments, conveyances, or
documents not attached as Exhibits hereto, at least five (5) business days
before filing ; provided, further, that Rosetta shall: (a) provide at least one
(1) business day’s advance written notice to Calpine regarding the nature and
substance of any anticipated transactions (including without limitation
communications) pursuant to that certain Limited Power of Attorney by and
between Calpine Corporation and Rosetta Resources Operating, L.P., dated as of
August 3, 2007; and (b) notify Calpine in writing regarding the substance of any
such transactions promptly after the occurrence thereof.

13.           Notices.  Notices to the Parties under this Agreement shall be
sent to:

Calpine Corporation
Rosetta Resources Inc.
Attn.: Scott Longmore
Attn.:  Michael J. Rosinski
717 Texas, Suite 1000
717 Texas, Suite 2800
Houston, Texas 77002
Houston, Texas 77002

14.           Successors and Assigns.  This Agreement and all of the provisions
hereof are binding upon and shall inure to the benefit of the Parties and their
respective successors, assigns, agents, employees, representatives, officers,
directors, partners, parent companies, subsidiaries, affiliates, assigns,
predecessors-in-interest, successors-in interest, and shareholders.  Nothing in
this Agreement, express or implied, is intended to confer upon any person other
than the Parties, and their successors and assigns, any rights, remedies or
obligations under or by reason of this Agreement.

15.           Governing Law.  The terms of this Agreement will be governed by,
and interpreted in accordance with the internal laws of, the State of Texas,
without regard to the rules regarding choice of laws or conflicts of laws.

16.           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original, but all of
which together shall constitute one and the same instrument.
 
17.           No Waivers.  The failure of any Party to insist on performance of
any of the terms and conditions of this Agreement shall not be construed as a
waiver or relinquishment of any rights granted hereunder or of the future
performance of any such term, covenant or condition, but the obligations of the
Parties with respect thereto shall continue in full force and effect.

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18.           Severability.  Subsequent to the Closing Date, if any part of this
Agreement is found to be prohibited, unlawful, void or for any reason
unenforceable, then it shall be deemed severable and separable from the
remaining parts and it shall not invalidate or render unenforceable the
remaining parts of this Agreement.

19.           Representations.  Each Party represents and warrants to, and
agrees with, the other Party as follows:

(a)           Each Party has received or has been given full opportunity to
receive independent legal advice from its attorneys with respect to the
advisability of making the settlement provided for herein, and with respect to
the advisability of executing this Agreement.

(b)           Neither Party (nor, without limitation, any officer, agent,
employee, representative, or attorney of or for either Party) has made any
statement or representation to the other Party regarding any fact relied upon in
entering into this Agreement, and each Party warrants that it does not rely upon
any statement, representation or promise of the other Party (or, without
limitation, of any officer, agent, employee, representative, or attorney for the
other Party) in executing this Agreement, or in making the settlement or
granting the releases provided for herein, except as expressly stated in this
Agreement.

(c)           Each Party has made such investigation of the facts pertaining to
the settlement outlined above and to this Agreement, and of all the matters
pertaining thereto, as it deems necessary.

(d)           In entering into this Agreement, and the settlement provided for
herein, each Party assumes the risk of any misrepresentation, concealment or
mistake.  If either Party should subsequently discover that any fact relied upon
by it in entering into this Agreement was untrue, or that any fact was concealed
from it, or that its understanding of the facts or of the law was incorrect,
such Party shall not be entitled to any relief in connection therewith,
including, without limitation on the generality of the foregoing, any alleged
right or claim to set aside or rescind this Agreement.  This Agreement is
intended to be and is final and binding between the Parties with respect to the
matters set forth in this Agreement, regardless of any claims of
misrepresentation, promise made without the intention to perform, concealment of
fact, mistake of fact or law, or of any other circumstances whatsoever.

(e)           No Party has heretofore assigned, transferred, or granted, or
purported to assign, transfer, or grant, any of the claims, demands, causes of
action or rights of appeal disposed of by this Agreement.

(f)           Each term of this Agreement is contractual and not merely a
recital.

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20.           Fees and Expenses.  Each Party shall pay its own costs, fees and
expenses (including attorneys’ fees) incurred in connection with the
preparation, negotiation, and execution of this Agreement, and the documents and
agreements contemplated by this Agreement, and shall not seek reimbursement
thereof from the other Party.

21.           Headings.  The headings in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.

22.           Exhibits.  The exhibits attached to this Agreement are fully
incorporated into and are made a part of this Agreement for all purposes.

23.           Court Approval.  This Agreement in its entirety, including the
various documents delivered executed by the Parties pursuant to this Agreement
are expressly subject to and contingent upon approval, by entry of a signed
order, of the Bankruptcy Court (the “Approval Order”); provided, however, that
approval of this Agreement shall not be construed to have any bearing on any
claims or causes of action not expressly waived herein.  The date on which the
Parties exchange executed copies of this Agreement and all documents listed on
Exhibit C shall be the “Execution Date” for this Agreement.  The date of the
entry of the Approval Order shall be the “Closing Date” for this
Agreement.  Calpine agrees to take such action as reasonably may be required to
promptly obtain such Bankruptcy Court approval of the Agreement and conveyance
of the Properties to Rosetta free and clear of all liens, claims and
encumbrances as set forth herein.  Rosetta agrees to assist Calpine in this
regard.  If this Agreement is not approved by the Bankruptcy Court, or if the
Approval Order is overturned or modified on appeal, then this Agreement shall be
of no further force and effect and, in such event, (a) neither this Agreement
nor any negotiations and writings in connection with this Agreement shall in any
way be construed as or deemed to be evidence of or an admission on behalf of any
Party regarding any claim or right that such Party may have against the other
Party, and (b) the Parties shall otherwise be restored to the position in effect
prior to the date of this Agreement.  The Parties agree to work cooperatively
with the Regulatory Authorities toward the objective that, on or before the
Closing Date, all Regulatory Authorities will have confirmed to the Parties that
their respective ministerial approvals will be granted upon receipt of the
Bankruptcy Court order approving this Agreement and their receipt, respectively,
of required documents.

24.           Exchange of Executed Originals.  On the Execution Date, each of
the Parties shall execute and deliver one complete set of original signature
pages of this Agreement and all other documents and agreements listed on Exhibit
C to the law firm representing the other Party pending the occurrence of the
Closing Date.

25.           Retention of Jurisdiction.  The Bankruptcy Court shall retain
jurisdiction to interpret and enforce this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and
year first above written.

ROSETTA RESOURCES INC.

By:
/s/ Michael J. Rosinski        
Name:
Michael J. Rosinski        
Date:
8/3/07  

ROSETTA RESOURCES OPERATING LP,
formerly known as Calpine Natural Gas L.P., and
successor by merger to Rosetta Resources California, LLC,
Rosetta Resources Rockies, LLC, Rosetta Resources Texas, GP, LLC,
Rosetta Resources Texas LP, LLC, and Rosetta Resources Texas LP

By:
/s/ Michael J. Rosinski        
Name:
Michael J. Rosinski        
Date:
8/3/07  

 
ROSETTA RESOURCES OFFSHORE, LLC

By:
/s/ Michael J. Rosinski        
Name:
Michael J. Rosinski        
Date:
8/3/07  

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CALPINE CORPORATION

By:
/s/ Gregory Doody        
Name:
Gregory Doody        
Date:
8/3/07  

CALPINE PRODUCER SERVICES, L.P.

By:
/s/ Gregory Doody        
Name:
Gregory Doody        
Date:
8/3/07  

 
CALPINE FUELS CORPORATION

By:
/s/ Gregory Doody        
Name:
Gregory Doody        
Date:
8/3/07  

 
CALPINE GAS HOLDINGS, L.L.C.

By:
/s/ Gregory Doody        
Name:
Gregory Doody        
Date:
8/3/07  

 
CALPINE PIPELINE COMPANY

By:
/s/ Gregory Doody        
Name:
Gregory Doody        
Date:
8/3/07  

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