While Callon would acquire for $1.2 billion Carrizo, the sale is pitched as a merger of near-equals of Houston-based producers in an all-stock deal. But New York hedge fund manager Paulson & Co., which holds nearly 10 percent of Callon’s shares, is contending it’s a bad deal.

Texas Oilfield Caps

“The strategic and financial benefits of Callon’s combination with Carrizo are compelling,” said Callon Chief Executive Joe Gatto.

The deal would combine Callon, which focuses exclusively on the booming Permian Basin, with Carrizo’s position in both the Permian and South Texas’ Eagle Ford shale.

Gatto argued that scale is needed to make Callon more competitive and that the more mature Eagle Ford production would provide steady cash flow to help fund Permian growth. His presentation touts the expanded company as “Texas strong” with more diversification in the state.