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Callon Petroleum Company Provides Operational Update And 2012 Capital Budget, Announces Permian Acreage Acquisitions

Callon Petroleum Company (NYSE: CPE) today announced its year-end 2011 proved reserves and 2012 capital budget, and provided an operational update, including the acquisition of additional leasehold positions in the Permian Basin.

Operational Update

Permian Basin

Net production from Callon’s Permian properties increased 135% to 965 barrels of oil equivalent per day (Boe/d) in 2011 from 411 Boe/d in 2010. The company drilled 36 gross (33 net) vertical Wolfberry wells in 2011 and net production from the properties at year-end 2011 was approximately 1,300 Boe/d.

At the Pecan Acres Field, the two initial wells have been drilled and stimulated, and are currently flowing back in preparation for first production. In addition, a third well has been drilled, but not yet completed, and a fourth well is currently being drilled. Callon plans to complete the third and fourth wells in March 2012.

Based upon Callon’s ongoing evaluation of its acreage position in the East Bloxom Field, located in Upton County, TX, and recent industry drilling results in northern Upton County and western Reagan County, TX, the company plans to commence a horizontal drilling program at its East Bloxom Field targeting the Wolfcamp B shale during the second quarter of 2012. Callon recently contracted a new-generation drilling rig under a two-year contract to execute the East Bloxom program.

Additionally, Callon has recently expanded its Permian Basin acreage position by 150% to 24,009 net acres from 9,539 net acres at December 31, 2011 with the acquisition of 16,020 gross (14,470 net) acres. The new leasehold is located in the northern portion of the Midland Basin which has had limited drilling activity relative to recent drilling and evaluation efforts in the southern portion of the basin. Callon has an average 90% working interest across the contiguous acreage positions and is the operator. The lease bonus payments were funded from existing cash balances. The company expects to acquire 3-D seismic data in the first half of 2012 and commence drilling to delineate the acreage in the third quarter of 2012. Callon has performed technical analysis of the newly acquired acreage and believes that the acreage is prospective for horizontal drilling of the Cline shale and vertical drilling of multiple intervals. Callon is continuing to pursue additional leasing opportunities in the area.

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