Callon Closes Sale Of 50% Working Interest In Entrada Field

Callon Petroleum Company has completed the sale of a 50% working interest in the Entrada Field, located in the Deepwater Region of the Gulf of Mexico, to CIECO Energy (US) Limited, a subsidiary of Tokyo-based ITOCHU Corporation.

At closing, CIECO paid Callon $155 million and reimbursed Callon $12.6 million for 50% of Entrada capital expenditures incurred prior to the closing date. In addition, CIECO agreed to fund half of a $40 million future contingent payment owed by Callon to BP Exploration and Production Company, the former majority interest owner of the field. As part of the transaction, CIECO has also agreed to provide a loan to Callon for $150 million of field development costs through initial production. Callon retained 50% working interest and will continue as operator of the field. The transaction has an effective date of January 1, 2008 and is pursuant to a Purchase and Sale Agreement dated February 11, 2008.

"With first production anticipated to be less than a year away, the Entrada Field development is expected to have a significant, favorable impact on the company, and is anticipated to double our production from current levels," Fred Callon, chairman and CEO, commented. "We are excited to have CIECO as our partner in the Entrada development."

ITOCHU Corporation, CIECO's parent company, is one of the oldest and most highly respected international trading houses in Japan with a global enterprise which includes significant long-term investments in the energy industry