8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report

May 9, 2011

 (Date of earliest event reported)

Callon Petroleum Company

(Exact name of registrant as specified in its charter)

Delaware	001-14039	64-0844345
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification Number)

200 North Canal St.

Natchez, Mississippi  39120

(Address of principal executive offices, including zip code)

(601) 442-1601

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

H-Form 8K 05.09.11 1st Q 2011 earnings release.doc

Section 2 — Financial Information

Item 2.02.  Results of Operations and Financial Condition

The following information, including Exhibits 99.1 and 99.2, is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition,” not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities  Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

On May 9, 2011, Callon Petroleum Company issued the press release attached as Exhibit 99.1 providing information regarding the company’s operating results for the quarter ended March 31, 2011.

As disclosed in a press release dated April 25, 2011 attached as Exhibit 99.2, Callon Petroleum Company announced that its conference call reporting first quarter 2011 results would be held on May 10, 2011 beginning at 10:00 a.m. Central Standard Time.

Section 7 — Regulation FD

Item 7.01.  Regulation FD Disclosure

The following information, including Exhibit 99.3, is being furnished pursuant to Item 7.01 “Regulation FD Disclosure,” not filed, for purposes of Section 18 of the Exchange Act.  This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

On May 9, 2011, Callon Petroleum Company issued the press release attached as Exhibit 99.3 announcing guidance for the second quarter and full year of 2011.

Section 9 — Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits

(c)  Exhibits

Exhibit Number                                       Title of Document                                           

99.1 Press release dated May 9, 2011 providing information regarding Callon Petroleum Company’s operating results for the quarter ended March 31, 2011.

99.2 Press release dated April 25, 2011 announcing Callon Petroleum Company’s conference call reporting first quarter 2011 results.

99.3 Press release dated May 9, 2011 announcing guidance for the second quarter and full year of 2011.

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 hereunto duly authorized.

Callon Petroleum Company

Date:  May 12, 2011	/s/ B.F. Weatherly
	B.F. Weatherly
	Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit Number                                       Title of Document                                           

99.1 Press release dated May 9, 2011 providing information regarding Callon Petroleum Company’s operating results for the quarter ended March 31, 2011.

99.2 Press release dated April 25, 2011 announcing Callon Petroleum Company’s conference call reporting first quarter 2011 results.

99.3 Press release dated May 9, 2011 announcing guidance for the second quarter and full year of 2011.

EX-99.1

EXHIBIT 99.1

For further information contact

Rodger W. Smith, 1-800-451-1294

FOR IMMEDIATE RELEASE

Callon Petroleum Company Reports Improved Results of Operations For First Quarter 2011

Natchez, MS (May 9, 2011)—Callon Petroleum Company (NYSE: CPE) today reported net income of $4.2 million, or $0.12 per diluted share, for the quarter ended March 31, 2011, and compares to net income of $3.9 million or $0.13 per diluted share for the same quarter in 2010.

Highlights of meaningful events thus far in 2011 include:

· Completed a public equity offering of common stock which resulted in net proceeds to the company of $73.8 million.  The proceeds will partially fund an expanded onshore drilling program in the Permian Basin and has funded the redemption of a portion of our Senior Notes due 2016.

· Reduced the Company’s long term debt outstanding by approximately 22% following the redemption of $31 million face value of Senior Notes, which will reduce 2011 cash interest expense by approximately $3.2 million and $4.0 million for each additional full year through the Notes maturity in 2016.

· Named a new Vice President and General Manager - Permian Basin Operations and continued to add to our experienced staff to implement and enhance our operational and financial objectives related to our new onshore strategy.

In addition, Regions Bank has agreed to increase the company’s borrowing base from $30 million to $45 million under the company’s $100 million Senior Secured Credit Agreement.  Regions Bank also agreed to other improved terms based upon the amounts drawn on the facility. The $45 million borrowing base will be reviewed and re-determined on a semi-annual basis. There are no borrowings outstanding under the Credit Agreement, which matures on September 25, 2012.

“This increase continues to demonstrate Region’s confidence in our operations strategy, our oil and gas assets and our strengthened balance sheet.  With $54 million of cash as of the end of the first quarter and the new $45 million borrowing base, we are well positioned to finance new opportunities to expand and grow the company,” explains Bobby F. Weatherly, Executive Vice President and CFO.

First Quarter 2011 Operating Results.  Operating results for the three months ended March 31, 2011 include oil and gas sales of $25.4 million from average production of approximately 4,713 barrels of oil equivalent per day (Boe/d), which was within the company’s published guidance range of 4,700 to 5,000 Boe/d.  For the same period of 2010, sales were $23.4 million from average production of 4,636 Boe/d.For the quarter ended March 31, 2011, the average price received per barrel of oil (Bbl), after the impact of hedging, increased 25% to $93.78, compared to $74.78 during the same period of 2010.  Partially offsetting the increases in oil prices, during the first quarter of 2011, the average price received per thousand cubic feet of natural gas (Mcf), after the impact of hedging, decreased 14% to $4.95 from $5.76 for the same period of 2010.

“In the first quarter, we successfully continued our accelerated drilling program in the Permian Basin,” Fred Callon, Chairman and CEO of Callon Petroleum points out, “and we are pleased with our fracture stimulation agreement with Halliburton which has secured access to completion services and improve our operational efficiency and execution. Importantly, our existing leasehold position provides us a significant drilling inventory providing long-term growth potential.”

Callon adds that "From a financial perspective, our successful equity offering provided us with additional capital, which we used to strengthen our balance sheet by reducing debt 22% and increasing future profitability by lowering our annual cash interest expense.  The balance of the proceeds along with our strong operating cash flow will be used to continue the development of our highly prospective Wolfberry oil play in the Permian Basin. With an increased borrowing base, new capital and cash flow from operations, we have the liquidity to fund our onshore growth plan and take advantage of potential acquisitions that fit our strategic plan to increase our long-term visible growth potential by continuing our expansion into onshore oil plays.”

First Quarter 2011 Discretionary Cash Flow. Discretionary cash flow for the three-month period ended March 31, 2011 totaled $12.8 million compared to $11.2 million during the comparable prior year period.  As defined by U.S. generally accepted accounting principles (GAAP), net cash flow provided by operating activities totaled $13.5 million and $55.6 million during the quarter ended March 31, 2011 and 2010, respectively.  Operating cash flows during 2010 benefited from $52.7 million related to the royalty recoupment received from the Bureau of Ocean Energy Management, Regulation and Enforcement (formerly known as the Minerals Management Service).  See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow, a non-GAAP measure, to net cash flow provided by operating activities.

Non-GAAP Financial Measure.  This news release refers to a non-GAAP financial measure as “discretionary cash flow.” Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt.  The company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements that the company may not control and that may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.

Reconciliation of Non-GAAP Financial Measure:
(in thousands)	Three Months Ended March 31
	2011		2010		Change
Discretionary cash flow	$	12,769	$	11,149	$	3,562
Net working capital changes and other changes		688		44,401		(43,713	)
Net cash flow provided by operating activities	$	13,457	$	55,550	$	(40,151	)

The following table sets forth certain unaudited operating information with respect to the Company's oil and gas operations for the periods indicated:

	Three-Months Ended March 31,
	2011			2010			$ Change			% Change
Net production:
Oil (MBbls)		201			223			(22	)		(10	)%
Gas (MMcf)		1,342			1,166			176			15	%
Total production (Mboe)		424			417			7			2	%
Average daily production (MBoe)		4.7			4.6			0.1			2	%
Average realized sales price (a):
Oil (Bbl)	$	93.78		$	74.78		$	19.00			25	%
Gas (Mcf)		4.95			5.76			(0.81	)		(14	)%
Total (Boe)		59.99			56.03			3.96			7	%
Oil and gas revenues (in thousands):
Oil revenue	$	18,804		$	16,663		$	2,141			13	%
Gas revenue		6,645			6,722			(77	)		(1	)%
Total	$	25,449		$	23,385		$	2,064			9	%
Additional per Boe data:
Sales price	$	59.99		$	56.03		$	3.96			7	%
Lease operating expense		(11.89	)		(11.14	)		(0.75	)		7	%
Operating margin	$	48.10		$	44.90		$	3.20			7	%
Other expenses per Boe:
Depletion, depreciation and amortization	$	23.05		$	16.33		$	6.72			41	%
General and administrative	$	9.96		$	10.31		$	(0.35	)		(4	)%
(a) Below is a reconciliation of the average NYMEX price to the average realized sales price:
Average NYMEX price per barrel of oil	$	94.11		$	78.72		$	15.39			20	%
Basis differential and quality adjustments		1.28			(2.75	)		4.03		nm
Transportation		(1.11	)		(1.19	)		0.08			(7	)%
Hedging		(0.50	)		-			(0.50	)		100	%
Average realized price per barrel of oil	$	93.78		$	74.78		$	19.00			25	%
Average NYMEX price per thousand cubic feet of natural gas (“Mcf”)	$	4.20		$	5.04			(0.84	)		(17	)%
Basis differential and quality adjustments		0.75			0.72			0.03			4	%
Hedging		-			-			-			0	%
Average realized price per Mcf of gas	$	4.95		$	5.76		$	(0.81	)		(14	)%
nm – Not Meaningful

Callon Petroleum Company

Consolidated Balance Sheets

(in thousands, except share data)

	March 31, 2011			December 31, 2010
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	54,482		$	17,436
Accounts receivable		10,424			10,728
Other current assets		1,247			2,180
Total current assets		66,153			30,344
Oil and gas properties, full-cost accounting method:
Evaluated properties		1,333,509			1,316,677
Less accumulated depreciation, depletion and amortization		(1,165,685	)		(1,155,915	)
Net oil and gas properties		167,824			160,762
Unevaluated properties excluded from amortization		8,662			8,106
Total oil and gas properties		176,486			168,868
Other property and equipment, net		3,800			3,370
Restricted investments		4,082			4,044
Investment in Medusa Spar LLC		10,214			10,424
Other assets, net		1,019			1,276
Total assets	$	261,754		$	218,326
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	19,727		$	17,702
Asset retirement obligations		2,405			2,822
Fair market value of derivatives		2,937			937
Total current liabilities		25,069			21,461
13% Senior Notes
Principal outstanding		106,961			137,961
Deferred credit, net of accumulated amortization of $10,790 and $3,964, respectively		20,717			27,543
Total 13% Senior Notes		127,678			165,504
Asset retirement obligations		13,146			13,103
Other long-term liabilities		3,441			2,448
Total liabilities		169,334			202,516
Stockholders' equity:
Preferred Stock, $.01 par value, 2,500,000 shares authorized;		-			-
Common Stock, $.01 par value, 60,000,000 shares authorized; 39,135,887 and 28,984,125     shares outstanding at March 31, 2011 and December 31, 2010, respectively		391			290
Capital in excess of par value		322,464			248,160
Other comprehensive loss		(10,519	)		(8,560	)
Retained earnings (deficit)		(219,916	)		(224,080	)
Total stockholders' equity		92,420			15,810
Total liabilities and stockholders' equity	$	261,754		$	218,326

Callon Petroleum Company

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

	Three-Months Ended March 31,
	2011			2010
Operating revenues:
Oil sales	$	18,804		$	16,663
Gas sales		6,645			6,722
Total operating revenues		25,449			23,385
Operating expenses:
Lease operating expenses		5,045			4,648
Depreciation, depletion and amortization		9,776			6,813
General and administrative		4,224			4,304
Accretion expense		615			580
Total operating expenses		19,660			16,345
Income from operations		5,789			7,040
Other (income) expenses:
Interest expense		3,492			3,594
Gain on early extinguishment of debt, net		(1,942	)		-
Other (income) expense		172			(361	)
Total other expenses		1,722			3,233
Income before income taxes		4,067			3,807
Income tax expense		-			-
Income before equity in earnings of Medusa Spar LLC		4,067			3,807
Equity in earnings of Medusa Spar LLC		97			116
Net income available to common shares	$	4,164		$	3,923
Net income per common share:
Basic	$	0.12		$	0.14
Diluted	$	0.12		$	0.13
Shares used in computing net income per common share:
Basic		33,744			28,738
Diluted		34,539			29,229

Callon Petroleum Company

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three-Months Ended March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	4,164		$	3,923
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation, depletion and amortization		10,001			6,989
Accretion expense		615			580
Amortization of non-cash debt related items		104			137
Amortization of deferred credit		(822	)		(889	)
Gain on early extinguishment of debt		(1,942	)		-
Equity in earnings of Medusa Spar LLC		(97	)		(116	)
Deferred income tax expense		1,982			1,332
Valuation allowance		(1,982	)		(1,332	)
Non-cash derivative expense due to hedge ineffectiveness		41			-
Non-cash charge related to compensation plans		776			643
Payments to settle asset retirement obligations		(71	)		(118	)
Changes in current assets and liabilities:
Accounts receivable		(110	)		47,081
Other current assets		933			585
Current liabilities		(256	)		(2,850	)
Change in gas balancing receivable		182			(44	)
Change in gas balancing payable		69			87
Change in other long-term liabilities		-			(115	)
Change in other assets, net		(130	)		(343	)
Cash provided by operating activities		13,457			55,550
Cash flows from investing activities:
Capital expenditures		(18,170	)		(6,856	)
Investment in restricted assets for plugging and abandonment		(38	)		(262	)
Proceeds from sale of mineral interest		2,787			-
Distribution from Medusa Spar LLC		307			473
Cash used in investing activities		(15,114	)		(6,645	)
Cash flows from financing activities:
Payments on senior secured credit facility		-			(10,000	)
Redemption of 13% senior notes		(35,062	)		-
Issuance of common stock		73,765			-
Cash provided by (used in) financing activities		38,703			(10,000	)
Net change in cash and cash equivalents		37,046			38,905
Cash and cash equivalents:
Balance, beginning of period		17,436			3,635
Less: Cash held by subsidiary deconsolidated at January 1, 2010		-			(311	)
Balance, end of period	$	54,482		$	42,229

Callon Petroleum Company is engaged in the acquisition, development, exploration and operation of oil and gas properties in Louisiana, Texas, and the offshore waters of the Gulf of Mexico.

This news release is posted on the company’s website at www.callon.com and will be archived there for subsequent review.  It can be accessed from the “News Releases” link on the left side of the homepage.

It should be noted that this news release contains projections and other 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.  These projections and statements reflect the company’s current views with respect to future events and financial performance.  No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors.  Some of the factors which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements are discussed in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and quarterly reports on Form 10-Q, available on our website or the SEC’s website at www.sec.gov.

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EX-99.2

EXHIBIT 99.2

For further information contact

Terry Trovato, 1-800-451-1294

FOR IMMEDIATE RELEASE

Callon Petroleum Company Announces First Quarter 2011

Reporting Date and Conference Call

 Natchez, MS (April 25, 2011)--Callon Petroleum Company (NYSE: CPE) today announced its first quarter 2011 results of operations will be released on Monday afternoon, May 9, 2011.  A conference call discussing the results and current activity is scheduled for 10 a.m. Central Daylight Time Tuesday, May 10, 2011.

 The conference call may be accessed live over the internet through the Events & Presentations Section of the company’s website at www.callon.com, and will be archived there for subsequent review.

 In addition, a telephone recording of the conference call will be available from noon May 10 until noon May 11 Central Daylight Time, and may be accessed by dialing1-800-633-8284 and entering Reservation Number 21521382.

 Callon Petroleum Company is engaged in the acquisition, development, exploration and operation of oil and gas properties in Louisiana, Texas and the offshore waters of the Gulf of Mexico.

 It should be noted that this news release contains projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These projections and statements reflect Callon’s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. Some of the factors which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements are discussed in our filings with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on our website or the SEC’s website at www.sec.gov.

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EX-99.3

EXHIBIT 99.3

For further information contact

Rodger W. Smith   1-800-451-1294

FOR IMMEDIATE RELEASE

Callon Petroleum Company Issues Guidance

For Second Quarter, Full Year 2011

Natchez, MS (May 9, 2011)—Callon Petroleum Company (NYSE: CPE) is issuing guidance for the second quarter and full year 2011.   The guidance, found in the table below, is expressed in ranges for the detailed components.

Second Quarter and Full Year 2011
Guidance Estimates
(In thousands, except per production unit amounts)
	Guidance for  2nd Quarter 2011			Guidance for Full Year 2011
Estimated production volumes:
Natural gas (Bcf)		1.3 -- 1.4			4.8 – 5.4
Crude oil (Mbo)		250 – 270			1,000 – 1,125
Boe/d		5,100 – 5,500			4,900 – 5,500
Lease operating expenses:
Cash	$	5,000 -- $ 6,000		$	21,000 -- $24,000
Non-cash		0000 ---  00000			0000 ---   00000
Total	$	5,000 -- $ 6,000		$	21,000 -- $24,000
General and administrative expenses:
Cash	$	2,600 -- $ 3,400		$	10,200 -- $10,700
Non-cash		1,400  --   1,600			5,000   --   6,000
Total	$	4,000 -- $ 5,000		$	15,200 -- $16,700
Interest expense:
Cash	$	3,100 -- $ 3,500		$	13,600 -- $15,000
Non-cash		(600) --    (700)			(2,600) --   (3,000)
Total	$	2,500 -- $ 2,800		$	11,000 -- $12,000
Medusa Spar LLC, net of tax	$	100 -- $ 125		$	300 -- $ 400
DD & A – per BOE	$	24.00 -- $ 24.50		$	23.75 -- $24.75
Accretion expense	$	600 -- $ 650		$	2,400 -- $ 2,600
Income tax rate		0	%		0	%
Cash income tax rate		0	%		0	%

The preceding guidance estimates contain assumptions that we believe are reasonable.  These estimates are based on information that is available as of the date of this news release.  We are not undertaking any obligation to update these estimates as conditions change or as additional information becomes available.

Listed below are the outstanding hedges for crude oil for 2011.  There are no natural gas hedges for 2011.
 

Crude Oil		6/30/11		9/30/11		12/31/11
Collars	Volume (Mbo)		30		30		30
	Ceiling	$	101.85	$	101.85	$	101.85
	Floor	$	75.00	$	75.00	$	75.00
Collars	Volume (Mbo)		15		15		15
	Ceiling	$	102.00	$	102.00	$	102.00
	Floor	$	80.00	$	80.00	$	80.00
Collars	Volume (Mbo)		30		30		30
	Ceiling	$	94.50	$	94.50	$	94.50
	Floor	$	75.00	$	75.00	$	75.00
Collars	Volume (Mbo)		45		45		45
	Ceiling	$	122.00	$	122.00	$	122.00
	Floor	$	90.00	$	90.00	$	90.00

Callon Petroleum Company is engaged in the acquisition, development, exploration and operation of oil and gas properties in Louisiana, Texas, and the offshore waters of the Gulf of Mexico.

This news release is posted on the company’s website at www.callon.com and will be archived there for subsequent review.  It can be accessed from the “News Releases” link on the left side of the homepage.

This news release contains projections and other forward-looking statements (including statements about fiscal fourth quarter and full-year financial and operating performance) within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These projections and statements reflect the company’s current views with respect to future events and financial performance.  No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could

differ materially from those projected as a result of certain factors.  Some of the factors which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements include:

· general economic and industry conditions;

· volatility of oil and natural gas prices;

· uncertainty of estimates of oil and natural gas reserves;

· impact of competition;

· availability and cost of seismic, drilling and other equipment;

· operating hazards inherent in the exploration for and production of oil and natural gas;

· difficulties encountered during the exploration for and production of oil and natural gas;

· difficulties encountered in delivering oil and natural gas to commercial markets;

· changes in customer demand and producers’ supply;

· uncertainty of our ability to attract capital;

· compliance with, or the effect of changes in, the extensive governmental regulations regarding the oil and natural gas business;

· actions of operators of our oil and gas properties;

· weather conditions; and

· the risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to those in our Annual Report for the year ended December 31, 2010 on Form 10-K.

The preceding estimates reflect our review of continuing operations only.  These estimates do not take into account any material transactions such as sales of debt and equity securities, acquisitions or divestitures of assets, and formations of joint ventures.  We continually review these types of transactions and may engage in one or more of these types of transactions without prior notice.

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