Callon Petroleum Announces 2005 Capital Budget

Callon Petroleum has approved a 2005 capital expenditure budget of $80 million, an increase of 23% from the 2004 capital expenditure budget of $65 million. The company anticipates that cash flow generated during 2005 will fully fund this budget.

"The important thing to note about the 2005 budget is that reserve additive spending has been increased by 173%, from $22 million in 2004 to $60 million in 2005," explains Fred L. Callon, Chairman and CEO. "During 2005, we anticipate drilling three Gulf of Mexico deepwater prospects, including two in the area of our Medusa Field. In addition, we have already identified 14 prospects elsewhere in the Gulf of Mexico region to be drilled."

Regarding recent Gulf of Mexico shelf exploration activities, Callon's North Padre Island Block 913 #1 exploratory well was drilled to a vertical depth of 8,082 feet and found apparent natural gas pay in multiple intervals. Currently, the well is being completed and will be tied back to existing infrastructure on a nearby block. Production is expected during the third quarter of 2005. Callon is the operator and owns a 50% working interest.

At High Island Block 119, a 2004 second-quarter discovery, the A-1 and A-2 wells are producing at a combined rate of 45 million cubic feet of natural gas and 700 barrels of condensate per day. The A-3 well currently is being drilled, targeting additional reserves in a separate fault block.