NATCHEZ, Miss.–(EMWNews)–Callon Petroleum Company (NYSE: CPE) today reported results of

operations for both the three and the six-month periods ended June 30,

2008.

Second Quarter and Six Months 2008 Net Income. For the quarter

ended June 30, 2008, the company reported net income of $5.2 million

which was a 100% increase over the $2.6 million reported for the same

period in 2007. Net income for the second quarter of 2008 included a

one-time charge of $11.9 million, or $0.35 per share net of tax, related

to the early extinguishment of debt associated with the retirement of

the company’s $200 million Senior Revolving

Credit Facility. Net income per share was $0.23 and $0.12 for the

quarters ended June 30, 2008 and 2007, respectively. For the six months

ended June 30, 2008, Callon reported net income of $12.8 million, or

$0.58 per share. This compares with net income of $8.4 million, or $0.39

per share during the same period of 2007. All per share amounts are on a

diluted basis.

Second Quarter and Six Months 2008 Operating Results. Operating

results for the three months ended June 30, 2008 include oil and gas

sales of $48.0 million from average production of 37.2 million cubic

feet of natural gas equivalent per day (MMcfe/d). This corresponds to

sales of $43.5 million from average production of 54.1 MMcfe/d during

the comparable 2007 period. The average price received, after the impact

of hedging, per thousand cubic feet of natural gas (Mcf) for the quarter

ended June 30, 2008 increased to $11.67, compared to $8.17 for the

quarter ended June 30, 2007. The average price received, after the

impact of hedging, per barrel of oil (Bbl) in the second quarter of 2008

increased to $99.99, compared to $61.47 during the second quarter of

2007. Oil and gas sales for the first six months of 2008 totaled $93.0

million from average production of 39.6 MMcfe/d. This corresponds to

sales of $89.0 million from average production of 57.2 MMcfe/d during

the same period in 2007. The average price, after the impact of hedging,

received per Mcf in the six-month period of 2008 increased to $10.46,

compared to $8.07 during the first six months of 2007, while the average

price received, after the impact of hedging, per Bbl in the first half

of 2008 increased to $93.27, compared to $58.36 during the same period

in 2007.

Second Quarter and Six Months 2008 Discretionary Cash Flow.

Discretionary cash flow for the three-month period ended June 30, 2008

totaled $30.2 million compared to $24.9 million during the comparable

prior year period. Net cash flow provided by operating activities, as

defined by GAAP, totaled $28.8 million and $37.3 million during the

quarters ended June 30, 2008 and 2007, respectively. Discretionary cash

flow for the first six months of 2008 totaled $59.3 million compared to

$58.4 million during the same period in 2007. Net cash flow provided by

operating activities, as defined by GAAP, totaled $63.9 million and

$70.2 million during the six-month periods ended June 30, 2008 and 2007,

respectively. (See “Non-GAAP

Financial Measure” that follows and the

accompanying reconciliation of discretionary cash flow, a non-GAAP

measure, 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.

Reconciliation of Non-GAAP Financial Measure:		Three Months Ended							Six Months Ended
(In thousands)		June 30,							June 30,
		2008				2007			2008			2007
Discretionary cash flow		$	30,245			$	24,886		$	59,288		$	58,392
Net working capital changes and other changes			(1,467	)			12,401			4,621			11,764
Net cash flow provided by operating activities		$	28,778			$	37,287		$	63,909		$	70,156

Production and Price Information:		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Production:
Oil (MBbls)			286				263				575				551
Gas (MMcf)			1,668				3,341				3,759				7,043
Gas equivalent (MMcfe)			3,382				4,920				7,211				10,348
Average daily (MMcfe)			37.2				54.1				39.6				57.2
Average prices:
Oil ($/Bbl)(a)		$	99.99			$	61.47			$	93.27			$	58.36
Gas ($/Mcf)		$	11.67			$	8.17			$	10.46			$	8.07
Gas equivalent ($/Mcfe)		$	14.20			$	8.84			$	12.90			$	8.60
Additional per Mcfe data:
Sales price		$	14.20			$	8.84			$	12.90			$	8.60
Lease operating expenses			1.44				1.75			$	1.39				1.47
Operating margin		$	12.76			$	7.09			$	11.51			$	7.13
Depletion		$	4.50			$	3.83			$	4.19			$	3.93
General and administrative (net of management fees)		$	0.87			$	0.46			$	0.78			$	0.43
(a)Below is a reconciliation of the average NYMEX price to the average realized sales price per barrel of oil:
Average NYMEX oil price		$	123.98			$	65.00			$	110.94			$	61.63
Basis differentials and quality adjustments			( 4.06	)			( 2.85	)			( 3.95	)			( 4.18	)
Transportation			( 1.34	)			( 1.14	)			( 1.30	)			( 1.14	)
Hedging			(18.59	)			0.46				(12.42	)			2.05
Averaged realized oil price		$	99.99			$	61.47			$	93.27			$	58.36

Callon Petroleum Company Consolidated Balance Sheets (In thousands, except share data) (Unaudited)
		June 30,				December 31,
		2008				2007
ASSETS
Current assets:
Cash and cash equivalents		$	42,056			$	53,250
Accounts receivable			41,956				22,073
Deferred tax asset			22,707				—
Restricted investments			—				100
Other current assets			3,366				6,592
Total current assets			110,085				82,015
Oil and gas properties, full-cost accounting method:
Evaluated properties			1,272,005				1,349,904
Less accumulated depreciation, depletion and amortization			(768,621	)			(738,374	)
			503,384				611,530
Unevaluated properties excluded from amortization			54,514				70,176
Total oil and gas properties			557,898				681,706
Other property and equipment, net			2,130				1,986
Restricted investments			4,704				4,525
Investment in Medusa Spar LLC			12,869				12,673
Other assets, net			3,378				9,577	Callon Petroleum Company Rodger W. Smith, 800-451-1294 Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions