Parallel Petroleum Announces Increased Production, Work-in-Progress, 2008 CAPEX Budget, Increased PDP Reserves and Field Operations Update

Business Wire,  Feb 20, 2008  

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MIDLAND, Texas -- Parallel Petroleum Corporation (NASDAQ: PLLL) today announced its fourth quarter 2007 average and February 1, 2008 estimated net daily production, work-in-progress, 2008 capital investment budget, 2007 reserves and field operations update. In a separate press release issued today, Parallel announced its financial results for the fourth quarter and year ended December 31, 2007. The Company's financial and field operations conference call and webcast will be held Thursday, February 21, 2008 at 2:00 p.m. Eastern time (1:00 p.m. Central time). Details for the conference call and webcast are disclosed at the end of this press release.

Net Daily Production - Fourth Quarter 2007 Average and February 1, 2008 Estimates

The Company's net daily production for the fourth quarter ended December 31, 2007 averaged 6,707 equivalent barrels of oil per day (BOEPD), an increase of 4% when compared to an average of 6,460 BOEPD during the third quarter ended September 30, 2007. Based on information available at the time of this press release, Parallel estimates that its net daily production was approximately 7,400 BOEPD as of February 1, 2008, which is a 10% increase over fourth quarter 2007 average net daily production. During the fourth quarter 2007, production from the Company's New Mexico Wolfcamp gas project increased 24% from 1,251 to 1,551 BOEPD, due to better, and more consistent, well results and timing of completions, and as of February 1, 2008, the Company estimates that its Wolfcamp production has increased an additional 10% to approximately 1,700 BOE per day due to new wells. Production from the Barnett Shale gas project increased only 1%, from 1,669 to 1,678 BOEPD, during the fourth quarter 2007 due to limited take-away capacity; however, as of February 1, 2008, the Company estimates that its Barnett Shale production has increased an additional 37% to approximately 2,300 BOE per day due to the completion of new wells and increased take-away capacity related to pipeline expansion and additional compression. The fourth quarter 2007 increases were partially offset by a 1% decrease in the Company's long-life Permian Basin oil projects, from 3,014 to 2,995 BOEPD, due to normal decline on base production, and an 8% decrease in its South Texas gas properties from 526 to 483 BOEPD due to normal decline. Due to uncertainties associated with initial decline rates of new wells and uncertainties associated with timing of take-away capacity and related pipeline expansion and compression, management cautions investors not to place undue reliance on February 1, 2008 estimated net daily production for the purpose of estimating the Company's future net daily production.

Please refer to Table 1 at the end of this press release for quarterly comparison information pertaining to daily production by area/property for the fourth quarter of 2007, the third quarter of 2007 and the fourth quarter of 2006.

Work-in-Progress Well Operations

As of February 1, 2008, the Company had 22 gross (8.74 net) wells in progress. Of the 22 gross wells, 18 gross (7.27 net) wells were shut-in awaiting pipeline, completing or awaiting completion, and 4 gross (1.47 net) wells were drilling. Of the 18 wells that were shut-in awaiting pipeline, completing or awaiting completion, 15 gross (4.56 net) wells were in the Barnett Shale and 3.0 gross (2.71 net) wells were in the Wolfcamp. Of the 4 wells that were drilling, 3 gross (0.54 net) wells were drilling in the Barnett Shale and 1 gross (0.93 net) well was drilling in the Wolfcamp. Please refer to Table 2 at the end of this press release for a summary of work-in-progress on certain of Parallel's properties as of February 1, 2008.

2008 Capital Investment Budget

Parallel's 2008 capital investment budget is approximately $127.2 million, which includes approximately $108.8 million for the drilling and completion of approximately 108 gross (63.6 net) new wells and the workover or conversion-to-injection of 67 gross (49.4 net) existing wells and approximately $18.4 million for the purchase of leasehold and seismic data. On a project basis, approximately $100.0 million, or 79%, of the 2008 capital investment budget is expected to be invested in the Company's two horizontal drilling gas projects. Parallel has budgeted approximately $60.0 million for its Barnett Shale Gas project and approximately $40.0 million for its New Mexico Wolfcamp Gas project. Additionally, the Company expects to invest approximately $24.5 million, or 19%, of the 2008 budget in its long-life, shallow oil properties located in the Permian Basin of West Texas. The remainder of the 2008 budget will be allocated to the Company's other projects. Parallel anticipates that the $127.2 million 2008 capital investment budget will be funded from its operating cash flow and revolving credit facility. At December 31, 2007, approximately $140.0 million was available under the Company's revolving credit facility. Please refer to Table 3 at the end of this press release for further information pertaining to the capital investment budget.