Callon Petroleum Company Reports Results for Fourth Quarter, Full Year 2007.

NATCHEZ, Miss. -- Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the quarter and the year ended December 31, 2007.

2007 Year-end Reserves. As of December 31, 2007, the company's year-end estimated net proved reserves were 263.6 billion cubic feet of natural gas equivalent (Bcfe). This represents an increase of 81% from 2006 year-end proved reserves of 145.6 Bcfe, which is primarily attributable to the company's acquisition of BP Exploration and Production Company's (BP) working interest in the Entrada Field in April 2007.

Liquidity. Following the acquisition of BP's interest in the Entrada Field in April 2007, our focus shifted to ensuring our ability to fund our development plan for the property. We decided to limit our 2007 exploration program to previously committed projects and sold our non-core, non-operated royalty and mineral interests in December 2007 for $61.5 million. As a result, we accumulated a cash balance of $53.3 million and had no borrowings under the senior secured credit facility as of December 31, 2007.

Fourth Quarter and Full Year 2007 Net Income. For the year ended December 31, 2007, the company reported net income of $15.2 million, or $0.71 per share. This compares with net income of $40.6 million, or $1.90 per share, for the same period in 2006. For the three months ended December 31, 2007, Callon reported net income of $4.5 million, or $0.21 per share. This compares with net income of $5.9 million, or $0.27 per share during the fourth quarter of 2006. The decline in net income for the year ended December 31, 2007, when compared to 2006, is primarily attributable to an increase in interest expense associated with the financing of the company's acquisition of BP's interest in the Entrada Field, lower 2007 oil production at the Medusa Field after the completion of remedial work on the Medusa A-1 well in late 2006 restored production at a lower rate, and an increase in the depletion, depreciation and amortization rate. All per share amounts are on a diluted basis.

Fourth Quarter and Full Year 2007 Operating Results. Operating results for the year ended December 31, 2007 include oil and gas sales of $170.8 million from average production of 51.3 million cubic feet of natural gas equivalent per day (MMcfe/d). The divestiture of Mobile Bay Blocks 952,953,955 in the second quarter of 2007 lowered 2007 average daily production by approximately 2.0 MMcfe/d. This corresponds to sales of $182.3 million from average daily production of 56.9 MMcfe/d during 2006. The average price received per thousand cubic feet of natural gas for the year ended December 31, 2007 decreased to $8.01, compared to $8.07 for the year ended December 31, 2006, while the average price received per barrel of oil in 2007 increased to $67.63, compared to $57.33 during 2006. Fourth quarter of 2007 oil and gas sales totaled $43.9 million from production of 45.6 MMcfe/d. This corresponds to sales of $44.8 million from production of 59.8 MMcfe/d during the same period in 2006. The average price received per thousand cubic feet of natural gas in the fourth quarter of 2007 increased to $8.18, compared to $7.82 during the fourth quarter of 2006, while the average price received per barrel of oil in the fourth quarter of 2007 increased to $82.47, compared to $52.77 during the same period in 2006. All average realized price amounts are after the impact of hedging. Reference the table below for a reconciliation of oil pricing.

Fourth Quarter and Full Year 2007 Discretionary Cash Flow. Discretionary cash flow for the year ended December 31, 2007 totaled $104.6 million compared to $133.0 million during the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $109.3 million and $135.5 million during the years ended December 31, 2007 and 2006, respectively. Fourth quarter of 2007 discretionary cash flow totaled $25.1 million compared to $32.9 million during the same period in 2006. Net cash flow provided by operating activities, as defined by GAAP, totaled $19.4 million and $28.8 million during the three-month periods ended December 31, 2007 and 2006, 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.

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