Callon Petroleum has signed a purchase and sale agreement with CIECO Energy, a subsidiary of Itochu Corporation, according to which Callon will sell CIECO a 50% working interest in the Entrada Field, located in the Deepwater Region of the Gulf of Mexico, US, for a total cash consideration of $175 million and additional contingent cash payments based upon field production milestones.
CIECO has also agreed to provide a non-recourse loan to Callon for its $150 million share of field development costs through initial production. Callon will retain a 50% working interest and continue as operator of the field. The transaction is expected to close by February 29, 2008.
Fred Callon, chairman and CEO of Callon, said: We feel we have gained a strong and important strategic partner in CIECO. Itochu Corporation, CIECO’s parent company, is one of the oldest and most highly respected international trading houses in Japan with a global enterprise which includes significant long-term investments in the energy industry.