Callon Petroleum Company Reports Results For Second Quarter, First Six Months Of 2011

Callon Petroleum Company (NYSE: CPE) today reported net income of $19.9 million, or $0.50 per fully diluted share, for the second quarter, and $24.0 million, or $0.65 per fully diluted share, for the six-month period ended June 30, 2011. This compares with net income of $2.1 million, or $0.07 per fully diluted share, during the second quarter, and $6.0 million, or $0.21 per fully diluted share, for the six-month period ended June 30, 2010.

Highlights during the second quarter and first half of 2011 include:

• Increased crude oil revenues by 83%, or $13.2 million, to $29.1 million for the three months ended June 30, 2011, compared to revenues of $15.9 million for the same period of 2010.
• Increased natural gas revenues to $7.7 million for the three months ended June 30, 2011 which is an increase of 37%, or $2.0 million, as compared to gas revenues of $5.7 million for the same period of 2010.
• Finalized the agreements necessary for a final wind down of the company’s former Entrada project, resulting in a Gain on Acquired Assets during the period of $3.7 million and a $4.0 million income tax benefit.
• Completed a public offering of 10.1 million common shares to partially fund the company’s accelerated Permian drilling program and to reduce long-term debt.
• Reduced long-term debt by $31 million realizing annual cash interest expense savings of $4 million. The outstanding balance of the company’s Senior Notes due in 2016 has been reduced to $107 million.

Second Quarter and Six Months 2011 Operating Results. Operating results for the three months ended June 30, 2011 include oil and gas sales of $36.8 million from average production of 5.6 thousand barrels of oil equivalent per day (Mboe/d). This corresponds to sales of $21.6 million from average production of 4.4 Mboe/d during the comparable 2010 period. The average price per barrel of oil (Bbl) received in the second quarter of 2011, after hedging impact, increased to $105.75, compared to $74.03 for the same period in 2010. The average price per thousand cubic feet of natural gas (Mcf) received during the quarter ended June 30, 2011 increased to $5.58, compared to $5.22, after the impact of hedging, for the quarter ended June 30, 2010.

Oil and gas sales for the first six months of 2011 totaled $62.3 million from average production of 5.1 Mboe/d. This corresponds to sales of $45.0 million from average production of 4.5 Mboe/d during the same period in 2010. The average price received per Bbl in the first half of 2011, after hedging impact, increased to $100.71, compared to $74.41 during the same period in 2010. Likewise, the average price received per Mcf in the six-month period of 2011 decreased to $5.27, compared to $5.50 during the first six months of 2010.

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