By SCOTT HAWKINS & BEN HILLYER

The Natchez Democrat

NATCHEZ — Nearly 70 years after Callon Petroleum was founded in Natchez, company officials announced the Natchez office would be closing next year.

Officials from the Houston office visited Natchez Thursday morning and announced to employees that it would be closing its Natchez office in mid-2020.

Callon is in the process of merging with another Houston-based company, which already had an accounting office, said Mitzi Conn vice president and chief accounting officer of Callon Petroleum.

Callon Petroleum announced in November 2018 its official headquarters would move to Houston, Texas, but the more than three-dozen Natchez-based Callon employees would stay rooted in Natchez.

In July, Callon Petroleum announced it was acquiring Houston-based energy company Carrizo Oil & Gas in an all-stock transaction valued at $3.2 billion.

Callon President and CEO Joe Gatto said the decision to close the Natchez office, which had primarily been providing accounting services in recent months with 25 to 40 employees, was a cost-savings decision.

“We are looking at the combined organization and certainly there are elements of cost-reductions that you look for when you’re putting two companies together,” Gatto said. “…As a larger organization with some more complexity, we thought it was very critical to have the functions that Natchez was performing for us as a small company housed with us in a broader team in Houston to make sure that we are coordinated in the right way.”

Gatto said the acquisition of Carrizo Oil & Gas, a company focused on Texas shale oil and gas and an industry leader in horizontal drilling in South Texas and West Texas, is ongoing and expected to formally close in mid-November.

“Currently, the plan is that we will be bringing in the (accounting) team from Carizzo,” Gatto said. “…We have severance plans and outplacement programs in place for our employees in Natchez to make sure we can help them transition to the next thing for them.”

Natchez Mayor Darryl Grennell said the announcement was “not good news” for the area.

“I am sorry to hear that Callon is moving out and taking everything to Texas,” Grennell said.

John S. Callon started what would become Callon Petroleum Company in 1950. Since then the company has operated its oil and gas exploration business for nearly 70 years.

“We do appreciate all the company has done for the city,” Grennell said.

Natchez Economic Development Director Chandler Russ called Thursday’s announcement “very frustrating.”

“I felt like we had dodged a bullet when Callon first announced it was moving its headquarters to Houston but indicated they were keeping the Natchez office open,” Russ said.

Russ said in the past 10 years as Callon’s business has evolved, the company has continued to feel a strong pull toward Houston, especially after the company focus on exploration in Texas.

“The change didn’t happen overnight,” Russ said. “It is a reflection of the change in business climate.”

Russ said his biggest concern about Thursday’s announcement was the highly skilled workforce that will be affected by the decision.

Gatto declined to provide specifics of the employee severance plans.

Russ said he hopes other entities in the area will pick up some of the employees that are being displaced.

“We want to keep the skilled labor here,” Russ said. “Our hope is that we see other companies possibly hiring those who want to stay in the area.”

Gatto also said no decision had been made about the Callon Petroleum office building in Natchez. The company moved into the offices on the corner of Franklin and Canal streets in the late 1970s.

“Outside of the office presence and obviously a long legacy there of several decades, we know that office has been a part of (that legacy) for a lot of that duration,” Gatto said. “Right now, we will be housing the employees there up until mid-2020, and we will be evaluating options for the building along the way but no formal decision has been made right now.”

Gatto said the combined company will retain the Callon Petroleum name after the merger closes. The all-stock deal gives Callon stockholders a 54% stake and Carrizo investors with a 46% stake. Carrizo shareholders received 2.05 Callon shares for each share of Carrizo common stock, valuing the stock at $13.12 per share.

The merger, Callon officials said, would enable the company to focus on the rapidly growing Delaware Basin and give Callon extensive holdings in the Permian Basin and Eagle Ford shale production areas.

The deal gave Callon an approximate 200,000-acre footprint in those locations, including 2,500 total gross horizontal drilling locations, a Callon news release said.