Callon offers exchange for its senior notes due 2010

By Special to The Democrat | The Natchez Democrat

Published Sunday, November 1, 2009

NATCHEZ — Callon Petroleum Company recently announced that it has commenced an exchange offer for any and all of its outstanding 9.75 percent senior notes due 2010.

For each $1,000 principal amount of outstanding senior notes tendered in accordance with the terms and conditions of the exchange offer, each tendering holder of senior notes will receive $750 principal amount of 13 percent senior secured notes due 2016, 20.625 shares of common stock and 1.6875 shares of convertible preferred stock. Each share of convertible preferred stock would be automatically convertible by the company into 10 shares of common stock following shareholder approval and the filing of an amendment to the company’s charter increasing the number of authorized shares of common stock as necessary to accommodate such conversion.

In connection with the exchange offer, Callon is soliciting consents to amend the indenture governing the Senior Notes. Holders tendering their Senior Notes will be required to consent to certain proposed amendments to the indenture governing the Senior Notes, which will eliminate substantially all of the indenture’s restrictive covenants.

Holders of approximately 73.5 percent of the senior notes have committed to tender their notes in the exchange offer. The exchange offer is conditioned upon the valid tender of at least 80 percent of the aggregate principal amount of the outstanding Senior Notes.

Callon will accept for exchange any and all Senior Notes that are validly tendered and not withdrawn on or before 5 p.m., New York City time, on Nov. 18, unless the exchange offer is extended or terminated.

An offering memorandum and other exchange materials which contain the terms of the exchange offer and consent solicitation are being distributed to holders of the Senior Notes today. Before making any decision with respect to the exchange offer and consent solicitation, holders of senior notes are encouraged to carefully read the offering memorandum and related materials.

Additional copies of the offering memorandum and other exchange materials governing the exchange offer and consent solicitation may be obtained by contacting the Information Agent, Global Bondholder Services Corporation, at 1-866-952-2200 or Callon Petroleum Company, at 1-800- 451-1294, extension 700.

The securities to be offered have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The company is relying on Section 3(a)(9) of the Securities Act to exempt the exchange offer from the registration requirements of the Securities Act.

This news release is not an offer to purchase or an exchange offer or a solicitation of acceptance of the exchange offer, which may be made only pursuant to the terms of the offering memorandum.