Filed Pursuant to Rule 433

Issuer Free Writing Prospectus dated September 9, 2014

Relating to Preliminary Prospectus Supplement dated September 8, 2014

Registration No. 333-176811

CALLON PETROLEUM COMPANY

Pricing Term Sheet

September 9, 2014

Common Stock

 

Issuer:		Callon Petroleum Company
Ticker / Exchange:		CPE / NYSE
Common stock offered by us:		12,500,000 shares
Over-allotment option:		The Company has granted the underwriters a 30-day option to purchase up to an aggregate of 1,875,000 additional shares of our common stock to cover any over-allotments.
Common stock outstanding immediately after this offering:		53,415,039 (55,290,039 if the underwriters exercise the over-allotment option in full)
Public offering price:		$9.00 per share
Price to the Issuer:		$8.5275 per share
Use of proceeds:		We estimate that our net proceeds from this offering will be approximately $106 million after deducting underwriting discounts and commissions and estimated offering expenses. We plan to use the net proceeds of this offering and the proceeds from the new secured second lien term loan of up to $275 million to fund the pending acquisition, to redeem our existing secured second lien term loan and to repay borrowings under our revolving credit facility. If the pending acquisition is not consummated, we intend to use the net proceeds of this offering to fund a portion of our exploration and development activities and for general corporate purposes, which may include leasehold interest and property acquisitions, repayment of indebtedness and working capital.
Trade date:		September 10, 2014
Settlement date:		September 15, 2014
Joint book-running managers:		Johnson Rice & Company L.L.C. and Scotia Capital (USA) Inc.
Senior co-managers:		Canaccord Genuity, Inc., Stephens Inc., Sterne, Agee & Leach, Inc.
Co-managers:		IBERIA Capital Partners L.L.C., Brean Capital, LLC, Capital One Securities, Inc., Global Hunter Securities, LLC, MLV & Co. LLC, Northland Securities, Inc.

The number of shares to be outstanding after this offering is based on 40,915,039 shares of our common stock outstanding as of September 3, 2014 and excludes 1,152,000 shares that may be issued pursuant to outstanding awards under our equity compensation plans.

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Additional Changes to the Prospectus Supplement:

The pro forma columns in the table in the section “Summary Historical and Pro Forma Financial Data” beginning on page S-12 of the Preliminary Prospectus Supplement are hereby restated as follows:

 

		Pro Forma
		Six Months Ended June 30, 2014				Year Ended December  31, 2013
		(in thousands)
Statement of Operations Data:
Operating revenues
Crude oil revenues		$	85,597			$	132,231
Natural gas revenues			8,406				19,535
Total oil and natural gas revenues			94,003				151,766
Operating expenses
Lease operating expenses			10,968				26,478
Production taxes			4,964				6,127
Depreciation, depletion and amortization			30,858				68,352
General and administrative			20,446				20,534
Accretion expense			433				1,846
Gain on sale of other property and equipment			(1,080	)			—
Impairment of other property and equipment			—				1,707
Total operating expenses			66,589				125,044
Income from operations			27,414				26,722
Other (income) expense
Interest expense			8,908				21,202
Gain on early extinguishment of debt			(3,205	)			(3,696	)
Gain on acquired assets			—				—
(Gain) loss on derivative contracts			7,198				1,360
Other income			(142	)			(485	)
Total other (income) expense			12,759				18,381
Income before income taxes			14,655				8,341
Income tax expense (benefit)			6,373				3,437
Income (loss) before equity in earnings of Medusa Spar LLC			8,282				4,904
Equity in earnings of Medusa Spar LLC			—				17
Net income (loss)			8,282				4,921
Preferred stock dividends			(3,947	)			(4,627	)
Income (loss) available to common stockholders		$	4,335			$	294
Balance Sheet Data (at period end):
Cash and cash equivalents		$	1,172
Property and equipment, net			646,028
Total assets			763,108
Total long-term debt			283,927
Stockholders’ equity			387,213

The first sentence of the “Summary—The Offering—Use of proceeds” section on page S-9 is hereby restated as follows:

The net proceeds from this offering will be approximately $106 million, after deducting the underwriting commissions and estimated offering expenses payable by us (or approximately $122 million if the underwriters’ option to purchase additional shares is exercised in full).

The first sentence of the “Use of Proceeds” section on page S-18 of the Preliminary Prospectus Supplement is hereby restated as follows:

The net proceeds from this offering will be approximately $106 million, after deducting the underwriting commissions and estimated offering expenses payable by us (or approximately $122 million if the underwriters’ option to purchase additional shares is exercised in full).

The “Capitalization” section on page S-19 of the Preliminary Prospectus Supplement is hereby restated as follows:

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CAPITALIZATION

The following table sets forth, on an unaudited basis, our cash and cash equivalents and capitalization as of June 30, 2014 on an actual basis and on an as adjusted basis to give effect to this offering and the new secured second lien term loan and the application of the estimated net proceeds as described in the “Use of Proceeds” as if this offering, the new secured second lien term loan and the pending acquisition had occurred on June 30, 2014. The table below should be read in conjunction with, and is qualified in its entirety by reference to “Use of Proceeds” in this prospectus supplement and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2013 and our Quarterly Reports on Form 10-Q for the quarterly period ended June 30, 2014, which are incorporated by reference herein.

 

		As of June 30, 2014
		Actual				As Adjusted
		(in thousands)
Cash and Cash Equivalents		$	1 ,172			$	1,172
Long-term debt, less current portion1:
Senior secured revolving credit facility			84,000				8,927
Secured second lien term loan			82,500				—
New secured second lien term loan			—				275,000
Total long-term debt		$	166,500			$	283,927
Stockholders’ Equity
Common stock		$	408			$	533
Series A preferred stock			16				16
Additional paid in capital			402,375				508,344
Retained deficit			(120,210	)			(121,680	)
Total stockholders’ equity		$	282,589			$	387,213
Total capitalization		$	449,089			$	671,140

 

¹ We have received a commitment to provide an amended senior secured revolving credit facility and new secured second lien term loan in connection with the pending acquisition. See “Prospectus Supplement Summary — Recent Developments — Pending Acquisition.”

THE ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) AND A PROSPECTUS SUPPLEMENT WITH THE SEC FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES. BEFORE YOU INVEST, YOU SHOULD READ THE PROSPECTUS, THE PROSPECTUS SUPPLEMENT AND OTHER DOCUMENTS THE ISSUER HAS FILED WITH THE SEC FOR MORE COMPLETE INFORMATION ABOUT THE ISSUER AND THIS OFFERING. YOU MAY GET THESE DOCUMENTS FOR FREE ON THE SEC WEB SITE AT WWW.SEC.GOV. ALTERNATIVELY, THE ISSUER, ANY UNDERWRITER OR ANY DEALER WILL ARRANGE TO SEND YOU THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT IF YOU REQUEST IT BY CALLING 1-800-443-5924 or 212-225-6854.