Callon Petroleum Co. has struck oil again.

This week, the Natchez-based company announced it had found one of the largest discoveries of crude oil in the Gulf of Mexico.

The find is part of the company’s Gulf of Mexico Medusa Project and is its third consecutive deep water discovery.

&uot;It’s good news,&uot; said John Weatherly Sr., vice president and chief financial officer. &uot;Any discovery is good news.&uot;

The deposits were located nearly 16,000 feet below the sea floor about 75 miles south of the mouth of the Mississippi River.

The company located its first pay-sand – a section full of oil – about two weeks ago. A second pay-sand was found about a week later, Weatherly said.

The discovery is still being tested, but the two sections of pay-sand are a good sign, he said. &uot;It’s an ongoing process, but (when) we reached the two pay-sands, that led us to believe it was going to be an economical discovery,&uot; Weatherly said.

&uot;It will take several wells to actually produce all the oil. We will drill one to two more wells before deciding to build a production field.&uot;

The find could mean an additional 7.5 million barrels of oil for Callon Petroleum.

It is big news for the company, which normally produces between 2.5 and 3.5 million barrels annually and has more than 30 million barrels in its reserve.

&uot;This discovery replaces like two and a half to three years of production,&uot; Weatherly said.

The 7.5 million barrels are the company’s 15 percent share of the discovery.

Two other oil companies, Murphy Oil Corporation and British-Borneo Petroleum Inc., own 60 and 25 percent of the discovery respectively.

Larry Benedetto, a New Orleans-based energy industry researcher with Howard Weil Labouisse Friedrichs Inc., said the find should be significant for Callon.

”They have another 1,500 feet top drill, so there’s more potential,” Benedetto said. ”It’s got four deep water prospects, all of them of fairly large size, that will be will tested in the next six to nine months.”

Callon’s success so far has helped push the value of its stock up to $15 per share, a new high. Weatherly said the increase was not entirely based on the new find, but instead said the stock was ”undervalued.”

Callon, which was founded in 1950, reported $35.6 million in sales during 1998 and employs 111 people.

The Associated Press contributed to this report.