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Shares of Callon Petroleum Co. (CPE) fell sharply Monday after the company said it would acquire Carrizo Oil & Gas  (CRZO) in an all-stock transaction valued at $3.2 billion.

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.