For further information contact John Weatherly, CFO 1-800-451-1294
Natchez, MS (December 11, 2001)--Callon Petroleum Company ( NYSE: CPE/CPE.PrA) disclosed today that its open natural gas swap contracts in the form of no-cost collars for 2002 are with Enron North America Corp., a subsidiary of Enron Corp., that recently filed for protection under Federal bankruptcy laws. The volume and price details of the 2002 swap contracts were initially disclosed in the Company's Form 8-K filed with the Securities and Exchange Commission on April 23, 2001.
Amounts related to the fair value of the 2002 swap contracts have not been previously recorded in Callon's operating results, as these derivatives qualify for deferral under the cash flow hedge provisions of Financial Accounting Standard No. 133 ("Accounting for Derivative Instruments and Hedging Activities.") Callon does not expect to have a charge to earnings in the fourth quarter of 2001 as a result of the action by the Enron Corp. subsidiary.
Callon's master agreement with Enron North America Corp. provides for various remedies and early termination rights in the event of a default by either of the parties. Callon is preparing to pursue appropriate action in the event that Enron North America Corp. does not fulfill its contractual obligations. Given the uncertainty of these recent developments and the volatility of natural gas prices, the ultimate recovery, if any, of any amounts cannot be determined at this time as these contracts relate to future events.
Callon Petroleum Company has been engaged in the exploration, development, acquisition and operation of oil and gas properties in the Gulf Coast region since 1950.
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.