Callon Petroleum Company plans to use proceeds from a public stock offering to continue exploration in the Gulf of Mexico.

The company earned more than $35.3 million from the 3.2 million shares of stock that were included in the offering.

&uot;We are very optimistic about it and very excited about the opportunities we have ahead of us in the next year,&uot;&160;said John Weatherly, Callon Senior vice president and chief financial officer.

Just last month Callon announced it had discovered one of the largest discoveries of crude oil in the Gulf of Mexico.

This $35.3 million will partially finance Callon’s research of 19 potential sites in the Gulf, including five deep water sites.

&uot;The proceeds of this offering, combined with the cash flow of our existing properties should fund&uot; the new prospects, Weatherly said.

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

The company reported strong earnings for the third quarter Wednesday with a net income of $1.1 million, or 6 cents per share. That is up from $933,000 reported during the same time last year.

The increase is based largely on $10.2 million in oil and gas sales during the third quarter, a gain of more than 11 percent.

Average daily production also increased 16 percent from 41.8 million cubic feet of natural gas during the third quarter 1999.

The average sale price per thousand cubic feet of natural gas during the third quarter increased four cents from $2.27 to $2.31.

For the first nine months of the year, the company reported net income of $1.8 million before preferred stock dividends.

After the dividends, the company had a two cents per share loss, compared to net income of $2.9 million, or 10 cents per share, for the first nine months of 1998.

Callon Petroleum has been engaged in the exploration and production of oil and gas in the Gulf of Mexico since 1950.