Callon Petroleum (CPE) Provides 2019 Outlook and Year End Proved Reserves

Callon Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today announced its 2019 capital expenditure budget, reflecting a combination of financial discipline and capital efficiency gains.

• 2019 forecasted annual production of 39.5 - 41.5 MBoe/d (77% - 78% oil), representing growth of over 20% compared to current "street" consensus of 32.7 MBoe/d for 2018
• Planned sequential decrease in 2019 operational capital expenditures to a range of $500 to $525 million
• Running an average of five drilling rigs to support larger and more efficient, multi-well pad development
• Plan to place 47 - 49 net wells on production with an increase of approximately 15% in average net lateral length over the 2018 program
• Year-end 2018 proved reserves of 238.5 MMBoe (54% proved developed and 76% oil), an annual increase in total proved reserves of 74% and proved developed reserves of 85%
• Year-end 2018 PV-10 value1 of $3.1 billion

Joe Gatto, President and Chief Executive Officer of Callon, stated, "Our 2019 capital program highlights our commitment to generate free cash flow in the near-term as we transition to scaled development of our high quality asset base. Strong cash operating margins underpin our plan and are complemented by capital efficiency improvements resulting from multi-well pad development in the Delaware Basin, increasing lateral lengths across our portfolio and a significant reduction in facilities spending. Even under our flat $50/Bbl WTI oil price assumption, we expect to be free cash flow positive in the fourth quarter of 2019 with a full year outspend that is almost half of our 2018 projection. In addition, although our production growth rate will be lower than previous years, the combination of a well-established Midland Basin operation and the emerging impact of large pad development in the Delaware Basin positions us for a sustained trajectory over the longer term with capital expenditures within or below internal cash flows." He continued, "Our tremendous progress maturing the business in recent years now allows us to benefit from repeatable well investments that will drive improved corporate-level returns due to scale efficiencies, reduced facilities needs and shallower production decline rates on a consolidated basis. Any improvement in commodity prices would further enhance that return on capital profile, as we have no plans to increase capital investment in 2019 with higher oil prices."

2019 Capital Expenditures Budget

Callon expects operational capital expenditures to range between $500 and $525 million in 2019, with infrastructure and facilities capital comprising approximately 15% of operational capital. The percentage of operational expenditures allocated to the Delaware Basin is planned to increase to approximately 60% of the total with a transition to larger pad development in our Spur area as the year progresses to capture additional capital efficiencies and optimize development of our multi-zone resource base. Specifically, our average pad size in the Spur area is expected to more than double relative to our 2018 activity. As a result, completion activity will be primarily focused on the Midland Basin in the first half of the year and shift to a high proportion of multi-well pads in the Delaware Basin in the second half of 2019, accelerating production growth into year-end while maximizing capital efficiency. The program is also designed to optimize production and resource recovery from multiple zones through various co-development concepts that are tailored to specific operating areas. As a result, we will target seven discrete flow units in 2019, but the largest amount of wells are scheduled for the Wolfcamp A (upper and lower intervals).

Importantly, our plan also incorporates a 15% increase in lateral length to approximately 8,400 feet as our highly contiguous Delaware Basin position enters program development, enabling us to place more net lateral feet on production in 2019 despite a decrease in net wells placed on line (47 to 49 wells) relative to 2018. Based upon this level of activity and associated allocation of capital, we are guiding to an average daily production rate range of 39.5 to 41.5 MBoe/d with an associated oil cut of 77% to 78%.

We are currently operating six rigs and one dedicated completion crew. We expect to reduce the number of active rigs from six to four by mid-year after building a sufficient inventory of wells awaiting completion to provide operational flexibility for an increased proportion of larger pad concepts. We began 2019 with one dedicated completion crew and intend to reactivate a second crew to reduce cycle times on large development pads once the necessary drilling activity has been completed.

In addition to operational capital expenditures, we forecast 2019 capitalized general & administrative expenses (cash component) of approximately $25 to $30 million and expect to capitalize 100% of cash interest expense that would otherwise be reflected on the income statement. Based upon current market interest rates, we estimate an applicable weighted average interest rate on our total average debt balances to be approximately 6%. In total, we forecast total capital expenditures (including estimated total capitalized expenses) of $615 million at the midpoint for 2019. This amount also includes land and seismic expenditures associated with the execution of our operational program. To the extent we identify accretive "bolt-on" land acquisition opportunities, we expect that these non-organic capital costs would be funded by divestitures of non-core properties or monetization of infrastructure investments.

2018 Proved Reserves

The Company recently completed the reserve audit for the year ended December 31, 2018 with its independent reserve auditor, DeGolyer and MacNaughton. As of December 31, 2018, Callon's estimated total proved reserves were 238.5 MMBoe, a 74% increase over the previous year-end. The proved reserves estimate is comprised of 76% oil and 54% proved developed estimated volumes. The PV-10 value1 of proved reserves at year-end 2018 was $3.1 billion, with a proved developed producing reserves value of $2.2 billion.

Callon Petroleum Company is an independent energy company focused on the acquisition, development, exploration and operation of oil and gas properties in the Permian Basin in West Texas.

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

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