sc13da109428002_12232013.htm

0000921895-13-002484.txt : 20131223 0000921895-13-002484.hdr.sgml : 20131223 20131223150533 ACCESSION NUMBER: 0000921895-13-002484 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20131223 DATE AS OF CHANGE: 20131223 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CALLON PETROLEUM CO CENTRAL INDEX KEY: 0000928022 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 640844345 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-50286 FILM NUMBER: 131294502 BUSINESS ADDRESS: STREET 1: 200 N CANAL ST CITY: NATCHEZ STATE: MS ZIP: 39120 BUSINESS PHONE: 6014421601 MAIL ADDRESS: STREET 1: 200 N CANAL ST CITY: NATCHEZ STATE: MS ZIP: 39120 FORMER COMPANY: FORMER CONFORMED NAME: CALLON PETROLEUM HOLDING CO DATE OF NAME CHANGE: 19940805 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Lone Star Value Management LLC CENTRAL INDEX KEY: 0001589350 IRS NUMBER: 462567817 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 53 FOREST AVENUE, 1ST FLOOR CITY: OLD GREENWICH STATE: CT ZIP: 06870 BUSINESS PHONE: (203) 542-0235 MAIL ADDRESS: STREET 1: 53 FOREST AVENUE, 1ST FLOOR CITY: OLD GREENWICH STATE: CT ZIP: 06870 SC 13D/A 1 sc13da109428002_12232013.htm AMENDMENT NO. 1 TO THE SCHEDULE 13D sc13da109428002_12232013.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 1)1

Callon Petroleum Company

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

13123X102

(CUSIP Number)

JEFFREY E. EBERWEIN

LONE STAR VALUE MANAGEMENT, LLC

53 Forest Avenue, 1st Floor

Old Greenwich, Connecticut 06870

(203) 542-0235

STEVE WOLOSKY

OLSHAN FROME WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

December 23, 2013

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON LONE STAR VALUE INVESTORS, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 950,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 950,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 950,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.3%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON LONE STAR VALUE CO-INVEST I, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 1,480,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 1,480,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,480,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.7%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON LONE STAR VALUE INVESTORS GP, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,430,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,430,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,430,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.0%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON LONE STAR VALUE MANAGEMENT, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CONNECTICUT
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 950,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 950,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 950,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.3%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON JEFFREY E. EBERWEIN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF, PF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,530,000
	8	SHARED VOTING POWER -0-
	9	SOLE DISPOSITIVE POWER 2,530,000
	10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,530,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.3%
14	TYPE OF REPORTING PERSON IN

1 Includes 100,000 Shares held in Mr. Eberwein’s IRA Account.

CUSIP NO. 13123X102

1	NAME OF REPORTING PERSON MATTHEW REGIS BOB
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER -0-
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0-
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 13123X102

The following constitutes Amendment No. 1 (“Amendment No. 1”) to the Schedule 13D filed by the undersigned. This Amendment No. 1 amends the Schedule 13D as specifically set forth herein.

Item 2.

Identity and Background.

Item 2 is hereby amended and restated to read as follows:

(a) This statement is filed by:

(i) Lone Star Value Investors, LP, a Delaware limited partnership (“Lone Star Value Investors”);

(ii) Lone Star Value Co-Invest I, LP, a Delaware limited partnership (“Lone Star Value Co-Invest”);

(iii) Lone Star Value Investors GP, LLC, a Delaware limited liability company (“Lone Star Value GP”), which serves as the general partner of Lone Star Value Investors and Lone Star Value Co-Invest;

(iv) Lone Star Value Management, LLC, a Connecticut limited liability company (“Lone Star Value Management”), which serves as the investment manager of Lone Star Value Investors;

(v) Jeffrey E. Eberwein, who serves as the manager of Lone Star Value GP and sole member of Lone Star Value Management; and

(vi) Matthew Regis Bob.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing and Solicitation Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

(b) The address of the principal office of each of Lone Star Value Investors, Lone Star Value Co-Invest, Lone Star Value GP, Lone Star Value Management and Mr. Eberwein is 53 Forest Avenue, 1st Floor, Old Greenwich, Connecticut 06870. The principal business address of Mr. Bob is c/o MB Exploration West Texas LLC, 2602 McKinney Avenue, Suite 220, Dallas, Texas 75204.

(c) The principal business of each of Lone Star Value Investors and Lone Star Value Co-Invest is investing in securities. The principal business of Lone Star Value GP is serving as the general partner of each of Lone Star Value Investors and Lone Star Value Co-Invest. The principal business of Lone Star Value Management is serving as the investment manager of Lone Star Value Investors. The principal occupation of Mr. Eberwein is serving as the manager of Lone Star Value GP and the sole member of Lone Star Value Management. The principal occupation of Mr. Bob is serving as the president of MB Exploration West Texas LLC.

(d) No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

CUSIP NO. 13123X102

(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Messrs. Bob and Eberwein are citizens of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

Item 3 is hereby amended and restated to read as follows:

The Shares purchased by each of Lone Star Value Investors and Lone Star Value Co-Invest were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated by reference herein. The aggregate purchase price of the 950,000 Shares beneficially owned by Lone Star Value Investors is approximately $4,734,759, excluding brokerage commissions. The aggregate purchase price of the 1,480,000 Shares beneficially owned by Lone Star Value Co-Invest is approximately $5,700,241, excluding brokerage commissions.

The Shares held in Mr. Eberwein’s IRA Account were purchased with personal funds in open market purchases. The aggregate purchase price of the 100,000 Shares held in Mr. Eberwein’s IRA Account is approximately $346,890, including brokerage commissions.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On December 23, 2013, Lone Star Value Management, together with its affiliates (“Lone Star Value”) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In the press release, Lone Star Value stated its beliefs that the Issuer is deeply undervalued and substantial change is needed on its Board of Directors (the “Board”) to ensure that appropriate actions are taken to prevent further shareholder dilution, lower the Issuer’s cost of capital, and create value for all of the Issuer’s shareholders. Lone Star Value stressed the importance of adding new highly-qualified, independent directors on the Board with relevant credentials for the Issuer, as well as direct shareholder representation to ensure the best interests of all shareholders are appropriately represented in the boardroom at all times. Lone Star Value also expressed its firm belief that the Issuer must significantly improve its corporate governance strategy and practices, including by immediately taking the necessary steps to declassify its board structure and to eliminate all supermajority vote requirements from its organizational documents. Lone Star Value expressed disappointment that the Board and management of the Issuer have rejected all of its suggestions to date.

Accordingly, also on December 23, 2013, an affiliate of Lone Star Value delivered a letter to the Issuer (the “Nomination Letter”) nominating Jeffrey E. Eberwein and Matthew Regis Bob (the “Nominees”) for election to the Board at the Issuer’s 2014 annual meeting of shareholders (the “2014 Annual Meeting”). The Reporting Persons believe that significant change to the composition of the Board is warranted given the qualifications of their Nominees and the deep undervaluation of the Issuer. Depending on certain factors, including the number of directors up for election at the 2014 Annual Meeting and the Issuer’s financial and operational performance, the Reporting Persons reserve the right to either withdraw certain or all of its nominees or to nominate additional nominees for election to the Board at the 2014 Annual Meeting.

CUSIP NO. 13123X102

The Reporting Persons have engaged, and intend to continue to engage, in discussions with management and the Board of the Issuer regarding Board representation and the composition of the Issuer’s Board, generally, and Lone Star Value remains prepared to engage in a constructive dialogue with the Board to reach a mutually agreeable resolution to reconstitute the Board in a manner that is in the best interests of all shareholders.

Item 5.

Interest in Securities of the Issuer.

Items 5(a)-(c) are hereby amended and restated to read as follows.

The aggregate percentage of Shares reported owned by each person named herein is based upon 40,444,973 Shares outstanding, which is the total number of Shares reported outstanding as of December 12, 2013 in the Issuer’s definitive proxy statement for a special meeting of stockholders, filed with the Securities and Exchange Commission on December 13, 2013.

A.	Lone Star Value Investors

(a)

As of the close of business on the date hereof, Lone Star Value Investors beneficially owned 950,000 Shares.

Percentage: Approximately 2.3%

(b)

1. Sole power to vote or direct vote: 950,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 950,000

4. Shared power to dispose or direct the disposition: 0

(c)

The transactions in the Shares by Lone Star Value Investors during the past 60 days are set forth in Schedule A and are incorporated herein by reference.

B.	Lone Star Value Co-Invest

(a)

As of the close of business on the date hereof, Lone Star Value Co-Invest beneficially owned 1,480,000 Shares.

Percentage: Approximately 3.7%

(b)

1. Sole power to vote or direct vote: 1,480,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 1,480,000

4. Shared power to dispose or direct the disposition: 0

(c)

Lone Star Value Co-Invest has not entered into any transactions in the Shares during the past 60 days.

C.	Lone Star Value GP

(a)

Lone Star Value GP, as the general partner of each of Lone Star Value Investors and Lone Star Value Co-Invest, may be deemed the beneficial owner of the (i) 950,000 Shares owned by Lone Star Value Investors and (ii) 1,480,000 Shares owned by Lone Star Value Co-Invest.

Percentage: Approximately 6.0%

CUSIP NO. 13123X102

(b)

1. Sole power to vote or direct vote: 2,430,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 2,430,000

4. Shared power to dispose or direct the disposition: 0

(c)

Lone Star Value GP has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of Lone Star Value Investors during the past 60 days are set forth in Schedule A and are incorporated herein by reference.

D.	Lone Star Value Management

(a)

Lone Star Value Management, as the investment manager of Lone Star Value Investors, may be deemed the beneficial owner of the 950,000 Shares owned by Lone Star Value Investors.

Percentage: Approximately 2.3%

(b)

1. Sole power to vote or direct vote: 950,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 950,000

4. Shared power to dispose or direct the disposition: 0

(c)

Lone Star Value Management has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of Lone Star Value Investors during the past 60 days are set forth in Schedule A and are incorporated herein by reference.

E.	Mr. Eberwein

(a)

As of the close of business on the date hereof, 100,000 Shares were held in Mr. Eberwein’s IRA Account. Mr. Eberwein, as the manager of Lone Star Value GP and sole member of Lone Star Value Management, may also be deemed the beneficial owner of the (i) 950,000 Shares owned by Lone Star Value Investors and (ii) 1,480,000 Shares owned by Lone Star Value Co-Invest.

Percentage: Approximately 6.3%

(b)

1. Sole power to vote or direct vote: 2,530,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 2,530,000

4. Shared power to dispose or direct the disposition: 0

(c)

Mr. Eberwein has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of Lone Star Value Investors during the past 60 days are set forth in Schedule A and are incorporated herein by reference.

CUSIP NO. 13123X102

Mr. Bob

(a)

As of the close of business on the date hereof, Mr. Bob does not own any Shares.

Percentage: 0%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 0

(c)

Mr. Bob has not entered into any transactions in the Shares during the past 60 days.

An aggregate of 2,530,000 Shares, constituting approximately 6.3% of the Shares outstanding, are reported in this Schedule 13D.

The Reporting Persons, as members of a “group” for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Person. Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 is hereby amended to add the following:

On December 23, 2013, the Reporting Persons entered into a Joint Filing and Solicitation Agreement in which, among other things (a) the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to securities of the Issuer and (b) the Reporting Persons agreed to solicit proxies for the election of the Nominees at the 2014 Annual Meeting. A copy of this agreement is attached as exhibit 99.2 hereto and is incorporated herein by reference.

On October 31, 2013, Lone Star Value Investors sold in the open market to counterparties call options referencing an aggregate of 75,000 shares of Common Stocks at a price of $7.50 per share, if such right is exercised prior to or on December 21, 2013.

On November 15, 2013, Lone Star Value Investors bought in the open market from counterparties put options referencing an aggregate of 25,000 shares of Common Stocks at a price of $5.00 per share, if such right is exercised prior to or on November 16, 2013.

On November 26, 2013, Lone Star Value Investors sold in the open market to counterparties put options referencing an aggregate of 25,000 shares of Common Stocks at a price of $7.50 per share, if such right is exercised prior to or on April 19, 2014.

On November 29, 2013, Lone Star Value Investors sold in the open market to counterparties put options referencing an aggregate of 10,000 shares of Common Stocks at a price of $7.50 per share, if such right is exercised prior to or on April 19, 2014.

CUSIP NO. 13123X102

On December 3, 2013, Lone Star Value Investors sold in the open market to counterparties put options referencing an aggregate of 15,000 shares of Common Stocks at a price of $7.50 per share, if such right is exercised prior to or on April 19, 2014.

On December 20, 2013, Lone Star Value Investors bought in the open market from counterparties call options referencing an aggregate of 75,000 shares of Common Stocks at a price of $7.50 per share, if such right is exercised prior to or on December 21, 2013.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibits:

99.1

Press Release, dated December 23, 2013.

99.2

Joint Filing and Solicitation Agreement by and among Lone Star Value Investors, LP, Lone Star Value Co-Invest I, LP, Lone Star Value GP, LLC, Lone Star Value Management, LLC, Jeffrey E. Eberwein and Matthew Regis Bob, dated December 23, 2013.

99.3

Power of Attorney.

CUSIP NO. 13123X102

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: December 23, 2013

Lone Star Value Investors, LP

By:	Lone Star Value Investors GP, LLC General Partner

By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein
	Title:	Manager

Lone Star Value Co-Invest I, LP

By:	Lone Star Value Investors GP, LLC
General Partner

By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein
	Title:	Manager

Lone Star Value Investors GP, LLC


By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein
	Title:	Manager

Lone Star Value Management, LLC


By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein
	Title:	Sole Member

	/s/ Jeffrey E. Eberwein
	Jeffrey E. Eberwein Individually and as attorney-in-fact for Matthew Regis Bob

CUSIP NO. 13123X102

SCHEDULE A

Transactions in the Shares During the Past Sixty Days

Shares of Common Stock

Purchased/(Sold)

Price Per

Share($)

Date of

Purchase / Sale

LONE STAR VALUE INVESTORS, LP

25,000	6.7005	11/29/2013
25,000	6.0855	12/09/2013
25,000	6.1496	12/09/2013
50,000	5.9394	12/11/2013
25,000	6.0635	12/12/2013
25,000	5.9249	12/18/2013
25,000	6.0375	12/19/2013
25,000	6.1009	12/20/2013

EX-99.1 2 ex991to13da109428002_122313.htm PRESS RELEASE, DATED DECEMBER 23, 2013 ex991to13da109428002_122313.htm

Exhibit 99.1

Lone Star Value Fights For Shareholder Rights At Callon Petroleum

Seeks to Improve Corporate Governance and Nominates Two Candidates for Election to Callon Petroleum’s Board at the 2014 Annual Meeting

NEW YORK, Dec. 23, 2013 -- Lone Star Value Management, LLC (together with its affiliates and director nominees, “Lone Star Value”), a significant shareholder in Callon Petroleum Company, a Delaware corporation (“CPE” or the “Company”) (NYSE: CPE), with ownership of approximately 6.3% of CPE’s outstanding shares of common stock, today announced that an affiliate of Lone Star Value has delivered a formal nomination of director candidates for election to the board of directors of CPE (the “Board”) at the upcoming 2014 annual meeting of CPE’s shareholders (the “2014 Annual Meeting”).

Lone Star Value is dedicated to maximizing shareholder value and improving corporate governance at CPE. Lone Star Value believes CPE is deeply undervalued and substantial change is needed on the Board to ensure that appropriate actions are taken to prevent further shareholder dilution, lower CPE’s cost of capital, and create value for all CPE shareholders. These changes should include the addition of new highly-qualified, independent directors on the Board with relevant credentials for CPE, as well as direct shareholder representation to ensure the best interests of all shareholders are appropriately represented in the boardroom at all times.

In the past few months, Lone Star Value has clearly expressed its views to the Board and management of CPE and has made every effort to engage in constructive discussions that would lead to meaningful improvement in the Board and corporate governance practices of CPE. Lone Star Value believes the suggestions it has made would meaningfully improve shareholder rights and representation at CPE. Unfortunately, to date the Company has rejected all suggestions made by Lone Star Value.

Accordingly, Lone Star Value has nominated two highly-qualified director candidates for election to the Board at the 2014 Annual Meeting. Lone Star Value’s candidates, Jeffrey E. Eberwein and Matthew Regis Bob, have significant and relevant experience and exceptional track records of identifying and executing on opportunities to unlock value for the benefit of all shareholders. Lone Star Value’s director nominees possess a well-balanced mix of skill sets to ensure that the Company evaluates, with an open mind and a keen sense of urgency, all alternative strategies to determine the best path forward to maximize value for all shareholders.

Further, Lone Star Value firmly believes that CPE must significantly improve its corporate governance structure and practices. For example, in its discussions with the Board and management, Lone Star Value has strongly suggested that the Board should immediately take the necessary steps to declassify its structure and to eliminate all supermajority vote requirements from its organizational documents. These changes are imperative to ensure good corporate governance and shareholder rights.

Lone Star Value is open to continuing its discussions with the Board regarding its composition and corporate strategy, and remains amenable to reaching a mutually agreeable resolution to re-constitute the Board in a manner that is in the best interests of all shareholders. However, if an agreement is not reached, Lone Star Value is fully prepared to solicit the support of its fellow shareholders to elect a new slate of directors at the 2014 Annual Meeting who are committed to representing the best interests of all CPE shareholders.

Lone Star Value’s independent and highly-qualified candidates are:

Matthew Regis Bob -- President of MB Exploration West Texas LLC and its affiliate MB Exploration East Texas LLC, which are oil, gas and mineral exploration, production and consulting companies. Mr. Bob has 20+ years of experience as an executive in the energy sector. He is the former President of Hall Phoenix Energy, LLC, a gas and oil exploration and production company and prior to that, built an independent exploration company, that hired and directed a technical and land team, which resulted in the acquisition of over 750,000 acres of leasehold and the drilling of over 400 oil and gas wells in six states. Mr. Bob served on the Board of Directors of Universal Seismic Associates, Inc., a then public company and provider of three-dimensional seismic acquisition and processing services to the energy industry in the U.S. Mr. Bob has repeatedly served as a consultant to financial institutions helping them reorganize and rationalize distressed energy assets.

Jeffrey E. Eberwein -- founder and Chief Executive Officer of Lone Star Value Management and a former portfolio manager at Soros Fund Management and Viking Global Investors. Mr. Eberwein has been a director of multiple public companies, including Aetrium Incorporated, Digirad Corporation, Crossroad Systems, Inc., NTS, Inc. and On Track Innovations Ltd., in many cases as a Chairman of the Board and member and Chairman of various committees of the Board. Mr. Eberwein has significant experience evaluating companies from a financial, operational, and strategic perspective to identify inefficiencies and the resulting opportunities for value creation. Mr. Eberwein has over twenty years of Wall Street experience and valuable public company and financial expertise, gained from both his employment history and directorships. Mr. Eberwein, a Texas-native, has 20+ years of experience investing in the energy sector, including 4 years of energy investment banking.

CERTAIN INFORMATION CONCERNING PARTICIPANTS

Lone Star Value Management, LLC (“Lone Star Value Management”), together with the participants named herein, intends to file a preliminary proxy statement and accompanying proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of their slate of two highly-qualified director nominees at the 2014 annual meeting of stockholders of Callon Petroleum Company, a Delaware corporation (the “Company”).

LONE STAR VALUE MANAGEMENT STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.

The participants in the proxy solicitation are Lone Star Value Investors, LP (“Lone Star Value Investors”), Lone Star Value Co-Invest I, LP (“Lone Star Value Co-Invest”), Lone Star Value Investors GP, LLC (“Lone Star Value GP”), Lone Star Value Management, Jeffrey E. Eberwein and Matthew Regis Bob (collectively, the “Participants”).

As of the date of this filing, Lone Star Value Investors beneficially owned 950,000 shares of Common Stock. As of the date of this filing, Lone Star Value Co-Invest beneficially owned 1,480,000 shares of Common Stock. Lone Star Value GP, as the general partner of each of Lone Star Value Investors and Lone Star Value Co-Invest, may be deemed the beneficial owner of the aggregate of 2,430,000 shares of Common Stock beneficially owned by Lone Star Value Investors and Lone Star Value Co-Invest. Lone Star Value Management, as the investment manager of Lone Star Value Investors, may be deemed the beneficial owner of the 950,000 shares of Common Stock beneficially owned by Lone Star Value Investors. Mr. Eberwein, as the manager of Lone Star Value GP and sole member of Lone Star Value Management, may be deemed the beneficial owner of the aggregate of 2,430,000 shares of Common Stock beneficially owned by Lone Star Value Investors and Lone Star Value Co-Invest in addition to 100,000 shares of Common Stock, which are held in his IRA Account. As of the date of this filing, Mr. Bob did not beneficially own any shares of Common Stock.

About Lone Star Value Management:

Lone Star Value Management is an investment firm which invests in undervalued securities and engages with its portfolio companies in a constructive way to help maximize value for all shareholders.

Investor Contacts:

John Glenn Grau

InvestorCom, Inc.

(203) 972-9300 ext. 11

Jeffrey E. Eberwein

203-542-7020

je@lonestarvm.com

EX-99.2 3 ex992to13da109428002_122313.htm JOINT FILING AND SOLICITATION AGREEMENT ex992to13da109428002_122313.htm

Exhibit 99.2

JOINT FILING AND SOLICITATION AGREEMENT

WHEREAS, certain of the undersigned are stockholders, direct or beneficial, of Callon Petroleum Company, a Delaware corporation (the “Company”);

WHEREAS, Lone Star Value Investors, LP, a Delaware limited partnership (“Lone Star Value Investors”), Lone Star Value Co-Invest I, LP, a Delaware limited partnership (“Lone Star Value Co-Invest”), Lone Star Value Investors GP, LLC, a Delaware limited liability company (“Lone Star Value GP”), Lone Star Value Management, LLC, a Connecticut limited liability company (“Lone Star Value Management” and together with each of Lone Star Value Investors, Lone Star Value Co-Invest, Lone Star Value GP, “Lone Star Value”), Jeffrey E. Eberwein and Matthew Regis Bob wish to form a group for the purpose of seeking representation on the Board of Directors of the Company (the “Board”) at the 2014 annual meeting of stockholders of the Company (including any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the “2014 Annual Meeting”) and for the purpose of taking all other action necessary to achieve the foregoing.

NOW, IT IS AGREED, this 23rd day of December 2013 by the parties hereto:

1. In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each of the undersigned (collectively, the “Group”) agrees to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Company. Each member of the Group shall be responsible for the accuracy and completeness of his/its own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows or has reason to know that such information is inaccurate. Lone Star Value or its representative shall provide each member of the Group with copies of all Schedule 13D filings and other public filings to be filed on behalf of such member prior to the filing or submission thereof.

2. So long as this agreement is in effect, each of the undersigned shall provide written notice to Olshan Frome Wolosky LLP (“Olshan”) of (i) any of their purchases or sales of securities of the Company; or (ii) any securities of the Company over which they acquire or dispose of beneficial ownership. Notice shall be given no later than 24 hours after each such transaction.

3. Each of the undersigned agrees to form the Group for the purpose of (i) soliciting proxies for the election of the persons nominated by the Group to the Board at the 2014 Annual Meeting, (ii) taking such other actions as the parties deem advisable, and (iii) taking all other action necessary or advisable to achieve the foregoing.

4. Lone Star Value Investors and Lone Star Value Co-Invest shall have the right to pre-approve all expenses incurred in connection with the Group’s activities and agree to pay directly all such pre-approved expenses on a pro rata basis between Lone Star Value Investors and Lone Star Value Co-Invest based on the number of Shares in the aggregate beneficially owned by each of Lone Star Value Investors and Lone Star Value Co-Invest on the date hereof.

5. Each of the undersigned agrees that any SEC filing, press release or stockholder communication proposed to be made or issued by the Group or any member of the Group in connection with the Group’s activities set forth in Section 3 shall be first approved by Lone Star Value, or its representatives, which approval shall not be unreasonably withheld.

6. The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party’s right to purchase or sell securities of the Company, as he/it deems appropriate, in his/its sole discretion, provided that all such sales are made in compliance with all applicable securities laws.

7. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart.

8. In the event of any dispute arising out of the provisions of this Agreement or their investment in the Company, the parties hereto consent and submit to the exclusive jurisdiction of the Federal and State Courts in the State of New York.

9. Any party hereto may terminate his/its obligations under this Agreement on 24 hours’ written notice to all other parties, with a copy by fax to Steve Wolosky at Olshan, Fax No. (212) 451-2222.

10. Each party acknowledges that Olshan shall act as counsel for both the Group and Lone Star Value and its affiliates relating to their investment in the Company.

11. Each of the undersigned parties hereby agrees that this Agreement shall be filed as an exhibit to a Schedule 13D pursuant to Rule 13d-1(k)(1)(iii) under the Exchange Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

LONE STAR VALUE INVESTORS, LP			LONE STAR VALUE CO-INVEST I, LP

By: Lone Star Value Investors GP, LLC, its General Partner			By: Lone Star Value Investors GP, LLC, its General Partner


By:	/s/ Jeffrey E. Eberwein		By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein		Name:	Jeffrey E. Eberwein
	Title:	Manager		Title:	Manager

LONE STAR VALUE MANAGEMENT, LLC			LONE STAR VALUE INVESTORS GP, LLC


By:	/s/ Jeffrey E. Eberwein		By:	/s/ Jeffrey E. Eberwein
	Name:	Jeffrey E. Eberwein		Name:	Jeffrey E. Eberwein
	Title:	Sole Member		Title:	Manager



	/s/ Jeffrey E. Eberwein
	JEFFREY E. EBERWEIN Individually and as attorney-in-fact for Matthew Regis Bob

EX-99.2 4 ex993to13da109428002_122313.htm POWER OF ATTORNEY ex993to13da109428002_122313.htm

Exhibit 99.3

POWER OF ATTORNEY

Know all by these presents, that the undersigned hereby constitutes and appoints Jeffrey E. Eberwein the undersigned’s true and lawful attorney-in-fact to take any and all action in connection with (i) the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of Callon Petroleum Company, a Delaware corporation (the “Company”) directly or indirectly beneficially owned by Lone Star Value Investors, LP (“Lone Star Value Investors”) or any of its affiliates or members of its Schedule 13D group (collectively, the “Lone Star Value Group”) and (ii) any proxy solicitation of the Lone Star Value Group to elect the Lone Star Value Group’s slate of director nominees to the board of directors of the Company at the 2014 annual meeting of stockholders of the Company (the “Solicitation”). Such action shall include, but not be limited to:

1. executing for and on behalf of the undersigned any Schedule 13D, and amendments thereto, filed by the Lone Star Value Group that are required to be filed under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company or the Solicitation;

2. if applicable, executing for and on behalf of the undersigned all Forms 3, 4 and 5 required to be filed under Section 16(a) of the Exchange Act in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company or the Solicitation;

3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of the Lone Star Value Group;

4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and

5. taking any other action of any type whatsoever in connection with the Solicitation, including entering into any settlement agreement, that in the reasonable opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's reasonable discretion and shall not be inconsistent with the terms of that certain letter agreement between Lone Star Value Investors and the undersigned dated December 20, 2013 with respect to the indemnification of the undersigned by Lone Star Value Investors under certain circumstances.

The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact’s substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act.

This Power of Attorney shall remain in full force and effect until the undersigned is no longer a member of the Lone Star Value Group unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 23rd day of December 2013.

/s/ Matthew Regis Bob

MATTHEW REGIS BOB