Callon's response to Paulson

[dan_s]

HOUSTON, Sept. 9, 2019 /PRNewswire/ -- Callon Petroleum Company (CPE) today issued the following statement in response to the filing by Paulson & Co. Inc.:

Callon maintains an open dialogue with all of our shareholders and welcomes constructive input toward the shared goal of maximizing shareholder value. Our Board of Directors is committed to acting in the best interests of Callon shareholders and will continue to take actions to deliver returns on their behalf.

The Board routinely surveys the strategic landscape and evaluates various opportunities to maximize shareholder value in the context of the prevailing operational, financial and strategic environments and remains committed to this ongoing effort. To this end, the Callon Board, with the assistance of outside financial and legal advisors, carefully evaluated the combination with Carrizo and determined that the transaction delivers compelling value to Callon shareholders.

We remain confident in the strategic and financial benefits of our combination with Carrizo, which will create a leading oil and gas company with scaled development operations focused on the Permian Basin in a transaction that is accretive on all per share metrics. The pro forma company will allocate more capital to the Permian Basin than the combined Callon and Carrizo standalone development plans, supported by strong free cash flow from the Eagle Ford Shale. < My Pro Forma forecast/valuation model for CPE (based on the assumption that the merger with CRZO closes by year-end) can be found on the EPG website under the Sweet 16 Tab. - Dan.

The benefits of the combination will include:

> A critical mass of complementary high-quality assets in the Permian to better compete in this dynamic basin;
> An integrated development program with scaled operations yielding meaningful cost reductions and cycle time improvements through the deployment of dedicated crews and equipment in simultaneous operations;
> Optimized capital allocation across the combined portfolio, including an expanded opportunity set for asset monetizations;
> An accelerated free cash platform that de-risks the capital structure by driving leverage below 2x, with a strong liquidity profile and no near-term debt maturities;
> Run-rate operational synergies of $65-$85 million and cash G&A savings of $35-$45 million per year driven by controllable, structural changes in the business; and
> Total synergy present value of $850 million, the majority of which accrues to Callon shareholders.

Further, as evidenced by our strong second quarter 2019 operational and financial results, we continue to make significant progress delivering on our strategy. We started the year by focusing on four key areas that we firmly believe will create significant value for investors over time:

> Improving our cash return on capital invested
> Generating sustainable free cash flow
> Reducing our leverage using free cash flow and asset monetizations
> Focusing on the optimization of our core portfolio with a development model that maximizes the value of our multi-zone inventory
> The combination of our two high quality asset bases and complementary teams accelerates our ability to deliver on these goals on a sustained basis.

Callon and Carrizo continue to expect that the transaction will close during the fourth quarter of 2019, subject to customary closing conditions, including the approval of shareholders of both companies.

As previously announced on July 15, 2019, Callon and Carrizo entered into a definitive agreement under which Callon will acquire Carrizo in an all-stock transaction valued at $3.2 billion. Under the terms of the agreement, Carrizo shareholders will receive a fixed exchange ratio of 2.05 Callon shares for each share of Carrizo common stock they own. Following the close of the transaction, Callon shareholders will own approximately 54% of the combined company, and Carrizo shareholders will own approximately 46%, on a fully diluted basis. The all-stock transaction is intended to be tax-free to Carrizo shareholders.

About Callon

Callon is an independent energy company focused on the acquisition and development of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas.

This news release is posted on Callon's website at www.callon.com, and will be archived for subsequent review under the "News" link on the top of the homepage.