Callon Petroleum Company Reports Results for Third Quarter, First Nine Months of 2002.

Business Editors & Energy Writers

NATCHEZ, Miss.--(BUSINESS WIRE)--Nov. 6, 2002

Callon Petroleum Company (NYSE:CPE)(NYSE:CPE.PrA) today reported its results of operations for both the quarter and the nine-month period ended September 30, 2002.

Results for the three-month period ended September 30, 2002 include a net loss of $1.3 million, or $0.12 per diluted share. This compares to net income of $262,000, or $0.00 per share on a diluted basis, for the same period in 2001. Total revenues for the three-month period ended September 30, 2002 were $15.8 million compared to $12.7 million for the same period in 2001.

Operating results for the three-month period ended September 30, 2002 include oil and gas sales of $15.8 million from average production of 45 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $12.4 million from average daily production of 40 MMcfe/d during the same period in 2001. During the third quarter of 2002, natural gas represented approximately 92 percent of the company's total production.

Production delays during the third quarter of 2002 as a result of tropical storms totaled approximately 130 million cubic feet of natural gas equivalent and reduced the company's average production for the quarter by 1.4 MMcfe/d.

The average price received per thousand cubic feet of natural gas in the third quarter of 2002 decreased by 4 percent to $3.24 compared to $3.38 during the same three months of 2001, while the average price received per barrel of oil in the third quarter of 2002 increased by 1 percent to $24.60 compared to $24.28 during the same period a year earlier.

For the nine months ended September 30, 2002, the company reported a net loss, before preferred stock dividends, of $1.4 million, or $0.18 per diluted share. This compares to net income of $9.9 million, or $0.67 per share on a diluted basis, for the same period in 2001. Total revenues for the nine-month period ended September 30, 2002 were $47.1 million compared to $51.2 million for the first nine months in 2001.

Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties primarily in the Gulf Coast region.

Consolidated Statements of Operations:
(In thousands, except per share amounts)

                                  Three Months Ended Nine Months Ended
                                     September 30,     September 30,
                                  ------------------ -----------------
                                      2002     2001     2002     2001
                                  --------- -------- -------- --------
Revenues:
  Oil and gas sales                $15,763  $12,404  $42,121  $49,647
  Loss on mark-to-market commodity
    derivative contracts               (18)      --     (788)      --
  Interest and other                    23      311      845    1,592
 Gain on sale of pipeline               --       --    2,454       --
 Gain on sale of Enron derivatives      --       --    2,479       --
                                  --------- -------- -------- --------
    Total revenues                  15,768   12,715   47,111   51,239
                                  --------- -------- -------- --------

Costs and expenses:
  Lease operating expenses           2,832    3,238    8,201    8,963
  Depreciation, depletion and
   amortization                      6,763    4,722   18,840   14,773
  General and administrative         1,070      843    3,508    3,545
  Interest                           7,103    3,508   18,736    8,742
                                  --------- -------- -------- --------
    Total costs and expenses        17,768   12,311   49,285   36,023
                                  --------- -------- -------- --------

Income (loss) from operations       (2,000)     404   (2,174)  15,216

Income tax expense (benefit)          (700)     142     (761)   5,326
                                  --------- -------- -------- --------

Net income (loss)                   (1,300)     262   (1,413)   9,890

Preferred stock dividends              320      320      958      958
                                  --------- -------- -------- --------

Net income (loss) available to
 common shares                     $(1,620)    $(58) $(2,371)  $8,932
                                  ========= ======== ======== ========

Net income (loss) per common
 share:
 Basic                              $(0.12)   $0.00   $(0.18)   $0.67
                                  ========= ======== ======== ========
 Diluted                            $(0.12)   $0.00   $(0.18)   $0.67
                                  ========= ======== ======== ========

Shares used in computing net
 income (loss)
Per common share:
 Basic                              13,377   13,284   13,342   13,265
                                  ========= ======== ======== ========
 Diluted                            13,377   13,407   13,342   13,412
                                  ========= ======== ======== ========

Consolidated Condensed Balance Sheets:
---------------------------------------
(In thousands)
                                            September 30, December 31,
                                                2002         2001
                                             ----------  ----------

Cash and cash equivalents                   $    6,920  $    6,887
Oil and gas properties, net                    373,843     343,158
All other assets                                22,812      22,050
                                             ----------  ----------
      Total assets                          $  403,575  $  372,095
                                             ==========  ==========

Long-term debt                              $  248,849  $  199,078
All other liabilities                           11,791      25,793
Stockholders' equity                           142,935     147,224
                                             ----------  ----------
      Total liabilities and
       stockholders' equity                 $  403,575  $  372,095
                                             ==========  ==========

Other Financial Information:
----------------------------------------
(In thousands, except per share amounts)

                                        Three Months    Nine Months
                                             Ended          Ended
                                        ------------------------------
                                        September 30,  September 30,
                                        ------------------------------
                                          2002   2001    2002    2001
                                        ------------------------------
                                          (1)             (1)
Net cash flow from operations before
 changes in current
 assets and liabilities                 $4,698 $6,777 $10,513 $32,772

Net cash flow per share                  $0.31  $0.48   $0.69   $2.37

(1) Excludes gain on sale of pipeline
 and Enron derivatives


Production and Price Information:
----------------------------------------
Production:
   Oil (MBbls)                              56     76     170     196
   Gas (MMcf)                            3,768  3,258  10,362  10,238
   Gas equivalent (MMcfe)                4,104  3,713  11,382  11,414
   Average daily (MMcfe)                  44.6   40.4    41.7    41.8

Average prices:
   Oil ($/Bbl)                          $24.60 $24.28  $22.29  $25.04
   Gas ($/Mcf)                            3.24   3.38    2.98    4.41
   Gas equivalent ($/Mcfe)                3.31   3.46    3.05    4.39


                  Fourth Quarter and Full Year 2002
                          Guidance Estimates
          (In thousands, except per production unit amounts)

                                          Guidance for   Guidance for
                                           4th Quarter     Full Year
                                               2002          2002
                                          ----------------------------
Description:
------------

Production volumes (MMcfe/d)                    45 - 48       42 - 44

Percent natural gas                                  92%           91%

Average costs (per Mcfe):
   Lease operating expense                $0.68 - $0.65 $0.71 - $0.70
   General and administrative expense     $0.27 - $0.26 $0.30 - $0.29
   Interest expense                       $1.68 - $1.60 $1.66 - $1.62

   Non-cash expenses included above       $0.46 - $0.43 $0.47 - $0.46

   DD&A                                           $1.64         $1.64

Volumetric production payment:
   Committed volume (MMcf)                          N/A       1,160.3
   Effective price (per Mcf)                        N/A         $2.08

Fixed  delivery contract:
   Committed volume (MMcf)                          233         1,605
   Effective price (per Mcf)                      $3.26         $3.26

Natural gas hedges:
   Volume MMcf                                    1,000         1,000
   Average floor price                            $3.75         $3.75
   Average ceiling price                          $5.05         $5.05

Share data:
   Basic weighted average shares                 13,600        13,400
   Diluted impact of stock options,
    warrants                                        700           525
   Diluted impact of convertible preferred
    stock                                         1,366         1,366

The preceding guidance estimates contain assumptions that we believe are reasonable. These estimates are based on information that is available as of the date of this news release. We are not undertaking any obligation to update these estimates as conditions change or as additional information becomes available.

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 include:

-- general economic conditions;

-- volatility of oil and natural gas prices;

-- uncertainty of estimates of oil and natural gas reserves;

-- impact of competition;

-- availability and cost of seismic, drilling and other equipment;

-- operating hazards inherent in the exploration for and production of oil and natural gas;

-- difficulties encountered during the exploration for and production of oil and natural gas;

-- difficulties encountered in delivering oil and natural gas to commercial markets;

-- changes in customer demand and producers' supply;

-- uncertainty of our ability to attract capital;

-- compliance with, or the effect of changes in, the extensive governmental regulations regarding the oil and natural gas business;

-- actions of operators of our oil and gas properties;

-- weather conditions; and

-- the risk factors discussed in our filings with the Securities and Exchange Commission, including those in our Annual Report on Form 10-K for the company's most recent fiscal year.

The preceding estimates reflect our review of continuing operations only. These estimates do not take into account any material transactions such as sales of debt and equity securities, acquisitions or divestitures of assets, and formations of joint ventures. We continually review these types of transaction and may engage in one or more of these types of transactions without prior notice.