UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

CALLON PETROLEUM COMPANY

(Exact name of registrant as specified in its charter)

Delaware		64-0844345
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

(Address of principal executive offices)(Zip code)

(Registrant’s telephone number,
including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer þ      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o      No þ

As of May 1, 2007, there were 20,750,449 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

 

 

CALLON PETROLEUM COMPANY

TABLE OF CONTENTS

				Page No.
Part I.		Financial Information
		Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006			3
		Consolidated Statements of Operations for Each of the Three Months in the Periods Ended March 31, 2007 and March 31, 2006			4
		Consolidated Statements of Cash Flows for Each of the Three Months in the Periods Ended March 31, 2007 and March 31, 2006			5
		Notes to Consolidated Financial Statements			6
		Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			11
		Item 3. Quantitative and Qualitative Disclosures about Market Risk			18
		Item 4. Controls and Procedures			18
Part II.		Other Information
		Item 6. Exhibits			19
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

Callon Petroleum Company

Consolidated Balance Sheets
(In thousands, except share data)

		March 31,				December 31,
		2007				2006
		(Unaudited)				(Note 1)
ASSETS
Current assets:
Cash and cash equivalents		$	3,064			$	1,896
Accounts receivable			24,618				32,166
Restricted investments			5,104				4,306
Fair market value of derivatives			4,202				13,311
Other current assets			5,056				5,973
Total current assets			42,044				57,652
Oil and gas properties, full-cost accounting method:
Evaluated properties			1,106,411				1,096,907
Less accumulated depreciation, depletion and amortization			(626,529	)			(604,682	)
			479,882				492,225
Unevaluated properties excluded from amortization			62,396				54,802
Total oil and gas properties			542,278				547,027
Other property and equipment, net			2,025				1,996
Restricted investments			1,224				1,935
Investment in Medusa Spar LLC			12,641				12,580
Other assets, net			11,220				4,337
Total assets		$	611,432			$	625,527
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	30,358			$	46,611
Asset retirement obligations			15,200				14,355
Current maturities of long-term debt			195				213
Total current liabilities			45,753				61,179
Long-term debt			225,999				225,521
Asset retirement obligations			26,244				26,824
Deferred tax liability			30,736				30,054
Other long-term liabilities			705				586
Total liabilities			329,437				344,164
Stockholders’ equity:
Preferred Stock, $.01 par value, 2,500,000 shares authorized;			—				—
Common Stock, $.01 par value, 30,000,000 shares authorized; 20,750,449 and 20,747,773 shares outstanding at March 31, 2007 and December 31, 2006, respectively			208				207
Capital in excess of par value			221,534				220,785
Other comprehensive income			2,731				8,652
Retained earnings			57,522				51,719
Total stockholders’ equity			281,995				281,363
Total liabilities and stockholders’ equity		$	611,432			$	625,527

The accompanying notes are an integral part of these financial statements.

Callon Petroleum Company

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

		Three Months Ended
		March 31,
		2007				2006
Operating revenues:
Oil sales		$	15,968			$	27,799
Gas sales			29,516				17,782
Total operating revenues			45,484				45,581
Operating expenses:
Lease operating expenses			6,599				5,905
Depreciation, depletion and amortization			21,847				13,836
General and administrative			2,221				1,726
Accretion expense			1,112				1,419
Derivative expense			—				90
Total operating expenses			31,779				22,976
Income from operations			13,705				22,605
Other (income) expenses:
Interest expense			4,585				4,148
Other (income)			(325	)			(330	)
Total other (income) expenses			4,260				3,818
Income before income taxes			9,445				18,787
Income tax expense			3,803				6,550
Income before equity in earnings of Medusa Spar LLC			5,642				12,237
Equity in earnings of Medusa Spar LLC, net of tax			161				530
Net income		$	5,803			$	12,767
Net income per common share:
Basic		$	0.28			$	0.66
Diluted		$	0.27			$	0.60
Shares used in computing net income per share amounts:
Basic			20,722				19,396
Diluted			21,193				21,329

The accompanying notes are an integral part of these financial statements.

Callon Petroleum Company

Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

		Three Months Ended
		March 31,				March 31,
		2007				2006
Cash flows from operating activities:
Net income		$	5,803			$	12,767
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization			22,039				14,018
Accretion expense			1,112				1,419
Amortization of deferred financing costs			569				546
Non-cash derivative expense			—				90
Equity in earnings of Medusa Spar LLC			(161	)			(530	)
Deferred income tax expense			3,803				6,550
Non-cash charge related to compensation plans			341				115
Excess tax benefits from share-based payment arrangements			—				(1,195	)
Changes in current assets and liabilities:
Accounts receivable			3,407				1,212
Other current assets			917				922
Current liabilities			(5,554	)			5,483
Change in gas balancing receivable			12				(320	)
Change in gas balancing payable			122				(2	)
Change in other long-term liabilities			(3	)			5
Change in other assets, net			462				(64	)
Cash provided by operating activities			32,869				41,016
Cash flows from investing activities:
Capital expenditures			(24,332	)			(39,507	)
Performance deposit for Entrada Acquisition			(7,500	)			—
Distribution from Medusa Spar LLC			186				370
Cash used by investing activities			(31,646	)			(39,137	)
Cash flows from financing activities:
Change in accrued liabilities to be refinanced			—				(5,000	)
Increases in debt			11,000				14,000
Payments on debt			(11,000	)			(9,000	)
Equity issued related to employee stock plans			—				(418	)
Excess tax benefits from share-based payment arrangements			—				1,195
Capital leases			(55	)			(82	)
Cash provided (used) by financing activities			(55	)			695
Net increase in cash and cash equivalents			1,168				2,574
Cash and cash equivalents:
Balance, beginning of period			1,896				2,565
Balance, end of period		$	3,064			$	5,139

The accompanying notes are an integral part of these financial statements.

CALLON PETROLEUM COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2007

1.		General
		The financial information presented as of any date other than December 31 has been prepared from the books and records of Callon Petroleum Company (the “Company” or “Callon”) without audit. Financial information as of December 31, 2006 has been derived from the audited financial statements of the Company, but does not include all disclosures required by U.S. generally accepted accounting principles. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial information for the periods indicated, have been included. For further information regarding the Company’s accounting policies, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed March 16, 2007. The results of operations for the three-month period ended March 31, 2007 are not necessarily indicative of future financial results.
2.		Net Income Per Share
		Basic net income per common share was computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share was determined on a weighted average basis using common shares issued and outstanding adjusted for the effect of common stock equivalents computed using the treasury stock method.
		A reconciliation of the basic and diluted net income per share computation is as follows (in thousands, except per share amounts):

		Three Months Ended
		March 31,
		2007				2006
(a) Net income		$	5,803			$	12,767
(b) Weighted average shares outstanding			20,722				19,396
Dilutive impact of stock options			138				342
Dilutive impact of warrants			298				1,491
Dilutive impact of restricted stock			35				100
(c) Weighted average shares outstanding for diluted net income per share			21,193				21,193
Basic net income per share (a¸b)		$	0.28			$	0.66
Diluted net income per share (a¸c)		$	0.27			$	0.60
Stock options and warrants excluded due to the exercise price being greater than the stock price (in thousands)			104				15

3.		Derivatives
		The Company periodically uses derivative financial instruments to manage oil and gas price risk on a limited amount of its future production and does not use these instruments for trading purposes. Settlements of derivative contracts are generally based on the difference between the contract price or prices specified in the derivative instrument and a NYMEX price or other cash or futures index price. Such derivative contracts are accounted for under Statement of Financial Accounting Standards No. 133. “Accounting for Derivative Instruments and Hedging Activities,” (“SFAS No. 133”), as amended.
		The Company’s derivative contracts that are accounted for as cash flow hedges under SFAS 133 are recorded at fair market value and the changes in fair value are recorded through other comprehensive income (loss), net of tax, in stockholders’ equity. The cash settlements on these contracts are recorded as an increase or decrease in oil and gas sales. The changes in fair value related to ineffective derivative contracts are recognized as derivative expense (income). The cash settlements on these contracts are also recorded within derivative expense (income).
		Cash settlements on effective cash flow hedges during the three-month periods ended March 31, 2007 and 2006 resulted in an increase in oil and gas sales of $2.8 million and $724,000, respectively.
		Derivative expense of $90,000 for the three-month period ended March 31, 2006 represents the amortization of derivative contract premiums.
		Listed in the table below are the outstanding derivative contracts as of March 31, 2007:

     Collars

										Average				Average
		Volumes per				Quantity				Floor				Ceiling
Product		Month				Type				Price				Price				Period
Oil			25,000			Bbls				$	65.00			$	83.30				04/07-12/07
Oil			25,000			Bbls				$	65.00			$	94.20				04/07-12/07
Natural Gas			600,000			MMBtu				$	8.00			$	12.70				04/07-12/07

4.		Long-Term Debt
		Long-term debt consisted of the following at:

		March 31,				December 31,
		2007				2006
		(In thousands)
Senior Secured Credit Facility (matures July 31, 2010)		$	35,000			$	35,000
9.75% Senior Notes (due 2010), net of discount			190,377				189,862
Capital lease			817				872
Total debt			226,194				225,734
Less current portion:
Capital lease			195				213
Long-term debt		$	225,999			$	225,521

		On August 30 2006, the Company closed on a four-year amended and restated senior secured credit facility with Union Bank of California (“UBOC”), N.A. The borrowing base which is reviewed and redetermined semi-annually, was $75 million at March 31, 2007. In connection with the financing of the acquisition of BP Exploration and Production Company’s (“BP”) interest in the Entrada Field which closed on April 18, 2007, the borrowing base under this facility was reduced by the majority lenders to $50 million at closing until the next borrowing base redetermination date. The Company’s senior secured credit facility was amended to allow for the Entrada financing transaction. See Note 7 for more discussion on the Entrada acquisition.
		Borrowings under the credit facility are secured by mortgages covering the Company’s major fields excluding Entrada. As of March 31, 2007, there was $35 million outstanding under the facility with a weighted average interest rate of 6.7%.
5.		Comprehensive Income
		A summary of the Company’s comprehensive income (loss) is detailed below (in thousands):

		Three Months Ended
		March 31,
		2007				2006
Net income		$	5,803			$	12,767
Other comprehensive income (loss):
Change in fair value of derivatives			(5,921	)			1,257
Total comprehensive income		$	(118	)		$	14,042

6.		Asset Retirement Obligations
		The following table summarizes the activity for the Company’s asset retirement obligations:

		Three Months Ended
		March 31, 2007
Asset retirement obligation at beginning of period		$	41,179
Accretion expense			1,112
Liabilities incurred			60
Liabilities settled			(21	)
Revisions to estimate			(886	)
Asset retirement obligation at end of period			41,444
Less: current asset retirement obligation			15,200
Long-term asset retirement obligation		$	26,244

		Assets, primarily U.S. Government securities, of approximately $6.3 million at March 31, 2007, are recorded as restricted investments. These assets are held in abandonment trusts dedicated to pay future abandonment costs for several of the Company’s oil and gas properties.
7.		Subsequent Events
		On April 18, 2007, the Company completed an acquisition of BP’s 80% working interest in the Entrada Field for total cash consideration of $190 million. The purchase price included $150 million payable at closing and an additional $40 million payable after the achievement of certain production milestones. The purchased interests included five federal offshore blocks at Garden Banks Blocks 738, 782, 785, 826 and 827, subject to certain depth limitations. As a result of the acquisition, Callon owns a 100% working interest in the Entrada Field and is operator. The acquisition added 150 Bcfe to Callon’s proved undeveloped reserves. The Company paid a performance deposit for the acquisition in March 2007, which is included in other assets as of March 31, 2007. This amount was transferred to oil and gas properties upon consummation of the acquisition.
		To finance the initial $150 million payment of the purchase price, Callon closed on a seven-year $200 million senior revolving credit facility with Merrill Lynch Capital Corporation contemporaneous with the closing of the acquisition, which is secured by a lien on the Entrada properties. The Company borrowed the full commitment amount under the facility at closing to cover the required $150 million payment to BP and, expenses and fees, and the balance was used to pay down our UBOC senior secured credit facility and for general corporate purposes.
		The Company’s senior secured credit facility with UBOC was amended to allow for the Merrill Lynch Capital Corporation financing. The amendment included a provision which reduced the borrowing base under the UBOC facility to $50 million until the next borrowing base redetermination date.

8.		Accounting for Uncertainty in Income Taxes
		Callon adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”), effective January 1, 2007. FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company had no significant unrecognized tax benefits at the date of adoption or at March 31, 2007. Accordingly, the Company does not have any interest or penalties related to uncertain tax positions. However, if interest or penalties were to be incurred related to uncertain tax positions, such amounts would be recognized in income tax expense. Tax periods for all years after 1978 remain open to examination by the federal and state taxing jurisdictions to which the Company is subject.
9.		Accounting Pronouncements
		In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, (“SFAS 157”), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company is currently reviewing the provisions of SFAS 157 and has not yet determined the impact of adoption.
		In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159 “The Fair Value Option for Financial Assets and Liabilities – Including an amendment of FASB No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007, with early adoption allowed. The Company has not yet determined the impact, if any, that adopting this standard might have on its financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report includes “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. All statements other than statements of historical facts included in this report, including statements regarding our financial position, adequacy of resources, estimated reserve quantities, business strategies, plans, objectives and expectations for future operations and covenant compliance, are forward-looking statements. We can give no assurances that the assumptions upon which such forward-looking statements are based will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in the section entitled “Risk Factors” included in our Annual Report on Form 10-K for our most recent fiscal year, elsewhere in this report and from time to time in other filings made by us with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by the Cautionary Statements.

General

Our revenues, profitability, future growth and the carrying value of our oil and gas properties are substantially dependent on prevailing prices of oil and gas, our ability to find, develop and acquire additional oil and gas reserves that are economically recoverable and our ability to develop existing proved undeveloped reserves. Our ability to maintain or increase our borrowing capacity and to obtain additional capital on attractive terms is also influenced by oil and gas prices. Prices for oil and gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors beyond our control. These factors include weather conditions in the United States, the condition of the United States economy, the actions of the Organization of Petroleum Exporting Countries, governmental regulations, political stability in the Middle East and elsewhere, the foreign supply of oil and gas, the price of foreign imports and the availability of alternate fuel sources. Any substantial and extended decline in the price of oil or gas would have an adverse effect on the carrying value of our proved reserves, borrowing capacity, revenues, profitability and cash flows from operations. We use derivative financial instruments for price protection purposes on a limited amount of our future production, but do not use derivative financial instruments for trading purposes.

The following discussion is intended to assist in an understanding of our historical financial position and results of operations. Our historical financial statements and notes thereto included elsewhere in this quarterly report contain detailed information that should be referred to in conjunction with the following discussion.

Comparison of Results of Operations for the Three Months Ended March 31, 2007 and the Three Months Ended March 31, 2006.

Oil and Gas Production and Revenues

Total oil and gas revenues remained consistent at $45.5 million in the first quarter of 2007 compared to $45.6 million in the first quarter of 2006. Total production on an equivalent basis for the first quarter of 2007 increased by 8% compared to the first quarter of 2006.

Gas production during the first quarter of 2007 totaled 3.7 Bcf and generated $29.5 million in revenues compared to 2.0 Bcf and $17.8 million in revenues during the same period in 2006. The average gas price after hedging impact for the first quarter of 2007 was $7.97 per Mcf compared to $9.12 per Mcf for the same period last year. The 90% increase in production was primarily attributable to 2005 discoveries being brought online after the first quarter of 2006, and from successful 2006 discoveries. The increase was partially offset by normal and expected declines in production from our Habanero, High Island Block 119 and Mobile Bay area fields and older properties. In addition, remedial work with wireline and coil tubing was performed to correct mechanical problems on the A-1 well at Medusa and resulted in production being restored at a lower rate.

Oil production during the first quarter of 2007 totaled 288,000 barrels and generated $16.0 million in revenues compared to 515,000 barrels and $27.8 million in revenues for the same period in 2006. The average oil price received after hedging impact in the first quarter of 2007 was $55.53 per barrel compared to $53.95 per barrel in the first quarter of 2006. The 44% decrease in production was due to the normal and expected declines from our Habanero Field and older properties. In addition, remedial work with wireline and coil tubing was performed to correct mechanical problems on the A-1 well at Medusa and resulted in production being restored at a lower rate.

Lease Operating Expenses

Lease operating expenses were $6.6 million for the three-month period ended March 31, 2007, a 12% increase when compared to the same period in 2006. The increase was primarily due to operating cost associated with our 2005 and 2006 discoveries that had not commenced production until after the first quarter of 2006. The increase was partially offset by lower thru put charges at Habanero and Medusa.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization for the three months ended March 31, 2007 and 2006 was $21.8 million and $13.8 million, respectively. The 58% increase was due to higher production volumes and a higher depletion rate resulting from higher costs associated with our exploration and development activities in the Gulf of Mexico and the downward revision of Entrada reserves in the fourth quarter of 2006.

Accretion Expense

Accretion expense for the three-month periods ended March 31, 2007 and 2006 of $1.1 million and $1.4 million, respectively, represents accretion of our asset retirement obligations. See Note 6 to the Consolidated Financial Statements.

General and Administrative

General and administrative expenses, net of amounts capitalized, were $2.2 million and $1.7 million for the three-month periods ended March 31, 2007 and 2006, respectively. The 29% increase was a result of additions to our staff and higher costs, which included non-cash charges that were recognized in the first quarter of 2007 for the amortization of compensation expense related to the restricted stock awards issued during the third quarter of 2006. The vesting period for these awards is four years.

Interest Expense

Interest expense increased to $4.6 million during the three months ended March 31, 2007 compared to $4.1 million during the three months ended March 31, 2006. The 12% increase was due to the average outstanding balance under our senior secured credit facility being higher during the first quarter of 2007 compared to the first quarter of 2006.

Income Taxes

Income tax expense was $3.8 million and $6.6 million for the three-month periods ended March 31, 2007 and 2006, respectively. The decrease was primarily due to a decrease in income before income taxes.

CALLON PETROLEUM COMPANY

PART II. OTHER INFORMATION

Item 6. EXHIBITS

     Exhibits

2.

Plan of acquisition reorganization arrangement, liquidation or succession

2.1

Purchase and Sale Agreement executed on March 8, 2007 by and between Callon Petroleum Operating Company and BP Exploration and Production Company (incorporated by reference to Exhibit 2.1 of the Company’s Report on Form 8-K filed on March 9, 2007).

3.

Articles of Incorporation and By-Laws

	3.1		Certificate of Incorporation of the Company, as amended (incorporated by reference from Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 filed March 15, 2004, File No. 001-14039)
	3.2		Bylaws of the Company (incorporated by reference from Exhibit 3.2 of the Company’s Registration Statement on Form S-4, filed August 4, 1994, Reg. No. 33-82408)

4.

Instruments defining the rights of security holders, including indentures

	4.1		Specimen Common Stock Certificate (incorporated by reference from Exhibit 4.1 of the Company’s Registration Statement on Form S-4, filed August 4, 1994, Reg. No. 33-82408)
	4.2		Rights Agreement between Callon Petroleum Company and American Stock Transfer & Trust Company, Rights Agent, dated March 30, 2000 (incorporated by reference from Exhibit 99.1 of the Company’s Registration Statement on Form 8-A, filed April 6, 2000, File No. 001- 14039)
	4.3		Form of Warrant entitling certain holders of the Company’s 10.125% Senior Subordinated Notes due 2002 to purchase common stock from the Company (incorporated by reference to Exhibit 4.13 of the Company’s Form 10-Q for the period ended June 30, 2002, File No. 001-14039)
	4.4		Form of Warrants dated December 8, 2003 and December 29, 2003 entitling lenders under the Company’s $185 million amended and restated Senior Unsecured Credit Agreement, dated December 23, 2003, to purchase common stock from the Company (incorporated by reference to Exhibit 4.14 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 001-14039)

4.5

Indenture for the Company’s 9.75% Senior Notes due 2010, dated March 15, 2004, between Callon Petroleum Company and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.16 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2004, File No. 001-14039)

10.

Material Contracts

	10.1		Credit Agreement dated as of April 18, 2007 by and among Callon Petroleum Company, each of the “Lenders” signatory thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Lead Arranger, Merrill Lynch Capital Corporation as Administrative Agent for the Lenders and as Revolving Loan Lender, and Merrill Lynch Bank USA as Deposit Bank (incorporated by reference from Exhibit 10.1 of the Company’s Report on Form 8-K filed on April 24, 2006).
	10.2		Amendment No. 1 dated as of April 18, 2007 among Callon Petroleum Company, the “Lenders” party to the Credit Agreement described therein, and Union Bank of California, N.A. as administrative agent for such Lenders (incorporated by reference from Exhibit 10.2 of the Company’s Report on Form 8-K filed on April 24, 2006).

31.

Certifications

	31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.

Section 1350 Certifications

	32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CALLON PETROLEUM COMPANY
Date: May 9, 2007		By:		/s/ B.F. Weatherly
		B.F. Weatherly, Executive Vice-President and Chief Financial Officer

Exhibit Index

Exhibit Number		Title of Document

22

			Agreement, dated December 23, 2003, to purchase common stock from the Company (incorporated by reference to Exhibit 4.14 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 001-14039)
	4.5		Indenture for the Company’s 9.75% Senior Notes due 2010, dated March 15, 2004, between Callon Petroleum Company and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.16 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2004, File No. 001-14039)

10.

Material Contracts

	10.1		Credit Agreement dated as of April 18, 2007 by and among Callon Petroleum Company, each of the “Lenders” signatory thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Lead Arranger, Merrill Lynch Capital Corporation as Administrative Agent for the Lenders and as Revolving Loan Lender, and Merrill Lynch Bank USA as Deposit Bank (incorporated by reference from Exhibit 10.1 of the Company’s Report on Form 8-K filed on April 24, 2006).
	10.2		Amendment No. 1 dated as of April 18, 2007 among Callon Petroleum Company, the “Lenders” party to the Credit Agreement described therein, and Union Bank of California, N.A. as administrative agent for such Lenders (incorporated by reference from Exhibit 10.2 of the Company’s Report on Form 8-K filed on April 24, 2006).

31.

Certifications

	31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.

Section 1350 Certifications

	32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002