The combined company will have "scaled development operations across a portfolio of core oil-weighted assets in both the Permian Basin and Eagle Ford Shale," the companies said in a statement.
Carrizo holders will receive 2.05 Callon shares for each of their shares, the statement said.
Carrizo shares ended up 1.9% at $10.70. Callon shares slumped 16% to $5.38.
After the deal closes, Callon shareholders will hold 54% of the combined company and Carrizo holders 46%.
The transaction is expected to close during the fourth quarter.
Callon said second-quarter production was "materially impacted by weather-related downtime at a third-party gas processing plant."
In total, "third-party midstream issues negatively impacted the company's production by more than 4,000 barrels of oil equivalent per day during the second quarter," Callon said.