Callon Petroleum Company Reports First Quarter 2009 Results of Operations

NATCHEZ, Miss.--(Business Wire)--
Callon Petroleum Company (NYSE: CPE) today reported results of operations for
the quarter ended March 31, 2009.

First Quarter 2009 Net Income. For the quarter ended March 31, 2009, the company
reported net income of $2.4 million, or $0.11 per share, exceeding analysis
consensus which was a net loss of $0.07 per share. This compares to net income
of $7.6 million, or $0.35 per share, for the same period in 2008.

First Quarter 2009 Operating Results. Oil and gas sales totaled $24.8 million
from production of 33.6 million cubic feet of natural gas equivalent per day
(MMcfe/d). This corresponds to sales of $45.0 million from production of 42.1
MMcfe/d during the same period in 2008. The average price received per thousand
cubic feet of natural gas decreased to $6.13, compared to $9.50 during the first
quarter of 2008, while the average price received per barrel of oil decreased to
$60.59, compared to $86.66 during the same period in 2008. All average realized
price amounts are after the impact of hedging, which added $7.9 million to oil
and gas sales.

First Quarter 2009 Discretionary Cash Flow. Discretionary cash flow for the
quarter ended March 31, 2009 totaled $14.2 million compared to $29.0 million
during the previous year. Net cash flow provided by operating activities, as
defined by GAAP, totaled $2.2 million and $35.1 million during the quarters
ended March 31, 2009 and 2008, respectively. (See "Non-GAAP Financial Measure"
that follows and the accompanying reconciliation of discretionary cash flow to
net cash flow provided by operating activities.)

Non-GAAP Financial Measure - This news release refers to a non-GAAP financial
measure as "discretionary cash flow." Callon believes that the non-GAAP measure
of discretionary cash flow is useful as an indicator of an oil and gas
exploration and production company`s ability to internally fund exploration and
development activities and to service or incur additional debt. The company also
has included this information because changes in operating assets and
liabilities relate to the timing of cash receipts and disbursements which the
company may not control and may not relate to the period in which the operating
activities occurred. Discretionary cash flow should not be considered an
alternative to net cash provided by operating activities or net income as
defined by GAAP.

Production and Price Information: Three Months Ended
March 31,
2009 2008
Production:
Oil (MBbls) 263 290
Gas (MMcf) 1,447 2,090
Gas equivalent (MMcfe) 3,026 3,828
Average daily (MMcfe) 33.6 42.1

Average prices:
Oil ($/Bbl)(a) $ 60.59 $ 86.66
Gas ($/Mcf) $ 6.13 $ 9.50
Gas equivalent ($/Mcfe) $ 8.20 $ 11.75

Additional per Mcfe data:
Sales price $ 8.20 $ 11.75
Lease operating expenses 1.33 1.35
Operating margin $ 6.87 $ 10.40

Depletion $ 3.11 $ 3.93
General and administrative (net of management fees) $ 0.60 $ 0.69

(a) Below is a reconciliation of the average NYMEX price to the average realized sales price
per barrel of oil:

Average NYMEX oil price $ 43.08 $ 97.90
Basis differentials and quality adjustments ( 4.01 ) ( 3.65 )
Transportation ( 1.35 ) ( 1.25 )
Hedging 22.87 ( 6.34 )
Averaged realized oil price $ 60.59 $ 86.66

Reconciliation of Non-GAAP Financial Measure: Three Months Ended
(In thousands) March 31,
2009 2008
Discretionary cash flow $ 14,230 $ 29,043
Net working capital changes and other changes (11,984 ) 6,088
Net cash flow provided by operating activities $ 2,246 $ 35,131

Callon Petroleum Company
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)

March 31, December 31,
2009 2008
ASSETS
Current
assets:
Cash and cash $ 651 $ 17,126
equivalents
Accounts 21,472 44,290
receivable
Fair market 14,857 21,780
value of
derivatives
Other current 191 1,103
assets
Total current 37,171 84,299
assets

Oil and gas
properties,
full-cost
accounting
method:
Evaluated 1,587,795 1,581,698
properties
Less (1,464,687 ) (1,455,275 )
accumulated
depreciation,
depletion and
amortization
123,108 126,423

Unevaluated 28,595 32,829
properties
excluded from
amortization
Total oil and 151,703 159,252
gas
properties

Other 2,419 2,536
property and
equipment,
net
Restricted 4,775 4,759
investments
Investment in 12,183 12,577
Medusa Spar
LLC
Other assets, 2,172 2,667
net
Total assets $ 210,423 $ 266,090

LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Accounts $ 23,375 $ 76,516
payable and
accrued
liabilities
Asset 9,456 9,151
retirement
obligations
Total current 32,831 85,667
liabilities

9.75% Senior 195,065 194,420
Notes
Callon 78,435 78,435
Entrada
Credit
Facility (non
-recourse)
Total long 273,500 272,855
-term debt

Asset 32,273 33,043
retirement
obligations
Callon 3,339 2,719
Entrada
Credit
Facility
interest
payable (non
-recourse)
Other long 1,638 1,610
-term
liabilities
Total 343,581 395,894
liabilities

Stockholders'
equity:
Preferred -- --
Stock, $.01
par value,
2,500,000
shares
authorized;
Common Stock, 216 216
$.01 par
value,
30,000,000
shares
authorized;
21,637,470
and
21,621,142
shares
outstanding
at March 31,
2009 and
December 31,
2008,
respectively
Capital in 228,968 227,803
excess of par
value
Other 7,234 14,157
comprehensive
income
Retained (369,576 ) (371,980 )
(deficit)
earnings
Total (133,158 ) (129,804 )
stockholders'
equity
Total $ 210,423 $ 266,090
liabilities
and
stockholders'
equity

Callon Petroleum Company
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
March 31,
2009 2008
Operating revenues:
Oil sales $ 15,952 $ 25,096
Gas sales 8,863 19,864
Total operating revenues 24,815 44,960

Operating expenses:
Lease operating expenses 4,039 5,178
Depreciation, depletion and amortization 9,413 15,029
General and administrative 1,819 2,652
Accretion expense 1,038 1,032
Total operating expenses 16,309 23,891

Income from operations 8,506 21,069

Other (income) expenses:
Interest expense 4,782 9,940
Callon Entrada Credit Facility interest expense (non-recourse) 1,556 --
Other (income) expense (95 ) (472 )
Total other (income) expenses 6,243 9,468

Income before income taxes 2,263 11,601
Income tax (benefit) expense (24 ) 4,082

Income before equity in earnings of Medusa Spar LLC 2,287 7,519
Equity in earnings of Medusa Spar LLC, net of tax 117 113

Net income available to common shares $ 2,404 $ 7,632

Net income per common share:
Basic $ 0.11 $ 0.37
Diluted $ 0.11 $ 0.35

Shares used in computing net income per common share:
Basic 21,607 20,871
Diluted 21,607 21,644

Callon Petroleum Company
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Three Months Ended
March 31, March 31,
2009 2008
Cash flows from operating activities:
Net income $ 2,404 $ 7,632
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization 9,629 15,213
Accretion expense 1,038 1,032
Amortization of deferred financing costs 731 873
Equity in earnings of Medusa Spar LLC (117 ) (113 )
Deferred income tax expense (24 ) 4,082
Non-cash charge related to compensation plans 569 371
Excess tax benefits from share-based payment arrangements -- (47 )
Changes in current assets and liabilities:
Accounts receivable 5,761 (648 )
Other current assets 912 4,702
Current liabilities (19,614 ) (252 )
Change in gas balancing receivable 319 923
Change in gas balancing payable 30 557
Change in other long-term liabilities 618 (4 )
Change in other assets, net (10 ) 810
Cash provided by operating activities 2,246 35,131

Cash flows from investing activities:
Capital expenditures (19,295 ) (46,208 )
Distribution from Medusa Spar LLC 574 108
Cash used in investing activities (18,721 ) (46,100 )

Cash flows from financing activities:
Equity issued related to employee stock plans -- (16 )
Excess tax benefits from share-based payment arrangements -- 47
Cash provided by financing activities -- 31

Net decrease in cash and cash equivalents (16,475 ) (10,938 )
Cash and cash equivalents:
Balance, beginning of period 17,126 53,250
Balance, end of period $ 651 $ 42,312

Callon Petroleum Company is engaged in the acquisition, development, exploration
and operation of oil and gas properties in the Gulf Coast region. The majority
of Callon`s properties and operations are concentrated in the offshore waters of
the Gulf of Mexico.

This news release is posted on the company`s website at www.callon.com and will
be archived there for subsequent review. It can be accessed from the "News
Releases" link on the left side of the homepage.

It should be noted that this news release contains projections and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
projections and statements reflect the company`s current views with respect to
future events and financial performance. No assurances can be given, however,
that these events will occur or that these projections will be achieved and
actual results could differ materially from those projected as a result of
certain factors. Some of the factors which could affect our future results and
could cause results to differ materially from those expressed in our
forward-looking statements are discussed in our filings with the Securities and
Exchange Commission, including our Annual Reports on Form 10-K, available on our
website or the SEC`s website at www.sec.gov.

Callon Petroleum Company
Rodger W. Smith, 800-451-1294

Copyright Business Wire 2009