Callon continued: “Our deepwater offshore fields continue to deliver positive results with minimal reinvestment requirements, generating free cash flow for reinvestment into onshore growth opportunities. We remain committed to the transformation of our asset base and believe the robust cash flow from our deepwater properties will continue to provide a strong source of funding for this change. Planned incremental recompletions and step-out opportunities at our two deepwater assets will leverage existing infrastructure. Importantly, approximately 70% of our offshore production is crude oil and has recently benefited from premium pricing relative to West Texas Intermediate crude oil benchmark pricing.”

Callon Petroleum ended the third quarter with long-term debt approximately 24% lower than at year-end 2010. Moreover, the company enjoys a strong liquidity position with $48 million in cash and an additional availability of $45 million on its revolving credit facility that is available to pursue growth initiatives.

Third Quarter and Nine Months 2011 Operating Results. Operating results for the three months ended September 30, 2011 include oil and gas sales of $33.6 million from average production of 5.3 thousand barrels of oil equivalent per day (Mboe/d). This corresponds to sales of $20.5 million from average production of 4.3 Mboe/d during the comparable 2010 period. The average realized prices per barrel of oil (Bbl) and per thousand cubic feet of natural gas (Mcf) for quarter ended September 30, 2011 were $98.27 and $5.46, respectively, representing an increase over the average realized prices of $72.47 and $4.84, respectively, for the same quarter of 2010. On an equivalent basis, the average realized price of $69.31 received during the third quarter of 2011 increased approximately 33% over the average realized price of $52.10 for the corresponding quarter of 2010.

Oil and gas sales for the first nine months of 2011 totaled $95.8 million from average production of 5.2 Mboe/d. This corresponds to sales of $65.4 million from average production of 4.4 Mboe/d during the same period in 2010. The average realized prices per barrel of oil (Bbl) and per thousand cubic feet of natural gas (Mcf) for nine months ended September 30, 2011 were $99.82 and $5.33, respectively, representing an increase over the average realized prices of $73.78 and $5.29, respectively, for the same quarter of 2010. On an equivalent basis, the average realized price of $67.75 received year-to-date during 2011 has increased approximately 25% over the average realized price of $54.27 for the corresponding nine months of 2010.

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