Parallel Petroleum Announces Operations Update and May 14, 2004 Earnings Conference Call & Webcast.Energy Editors/Business Editors MIDLAND, Texas--(BUSINESS WIRE)--May 12, 2004 Parallel Petroleum Corporation (Nasdaq:PLLL) today announced an operations update. Please refer to the Company's recent news releases dated March 16, 2004 and April 14, 2004 for prior information on the Company's operations and its $25.3 million 2004 capital investment budget. Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. of West Texas The Permian Basin of West Texas generated approximately 61% of Parallel's first quarter 2004 production and represented 84% of its reserve value as of December 31, 2003. Fullerton Field, Andrews County -- This property was acquired in December 2002 and represented 42% of the Company's first quarter 2004 production and 57% of its reserve value as of December 31, 2003. A total of 63 water-frac re-stimulations were performed during the period from mid-February 2003 through the end of March 2004. Parallel's March 2004 estimated net daily production from the Fullerton properties has increased to approximately 1,350 BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip per day, which is 30% above the extrapolated base production trend of 1,040 BOE per day. Based on these results, the Company will continue the accelerated re-frac pace established in January of this year. This will allow us to re-stimulate as many as 40 additional wells and to complete the program prior to year-end. The Company will also drill 6 infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. San Andres wells at 4,500 feet starting in June 2004. Parallel's working interest in these properties ranges from 25% to 85%. The Company has budgeted approximately $3.2 million, net to its interest, for this project in 2004. Diamond M Shallow Leases, Scurry County -- Although this property represented less than 1% of Parallel's first quarter 2004 production and only 8% of its reserve value as of December 31, 2003, Parallel expects it to contribute significantly to its future production and reserve value as it is developed over the next three years. In January 2004, Parallel commenced a 30-well infill drilling program that it expects to complete by the fourth quarter of 2004. The program is designed to recover reserves trapped in 10-acre locations and to provide secondary production and reserve response by increasing reservoir pressure through water injection. As of today, 12 wells have been drilled and 8 wells placed on pump at an average initial rate of approximately 30 barrels of oil per day. The Company anticipated and has seen a production decline from each producing well's initial rate due to the pressure depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d nature of the reservoir. The Company expects these declines to be arrested, with production stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. and beginning to incline as pressure support from the injection wells begins to build sometime in the third and fourth quarters. Current incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. production is just over 100 gross (50 net) BOE per day Depending upon the results of this program, the Company presently anticipates drilling approximately 60 additional wells prior to the end of 2005. Parallel anticipates that it will spend on this project, net to its 66% working interest, approximately $19.0 million over the next three years, of which $7.2 million is budgeted for 2004. Lion Diamond M Canyon Unit, Scurry County -- This property includes the same surface acreage as the Diamond M Shallow property and is in its early stage of re-development. It generated approximately 5% of Parallel's first quarter 2004 production and represented only 3% of its reserve value as of December 31, 2003. Parallel has identified at least 42 mechanically viable Canyon Reef wells as deepening deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. Noun 1. deepening - a process of becoming deeper and more profound candidates. The Company is currently expanding the field's injection and facility fluid handling capacity to accommodate increased volumes from future workovers. Parallel is also preparing to shoot a 3-D seismic survey utilizing both compressional and shear wave shear wave See secondary wave. technology. This 3-D seismic survey will better define reservoir compartmentalization and help high-grade the Canyon Reef opportunities that have been identified by the Company's geological and reservoir engineering Reservoir engineering is a branch of petroleum engineering, typically concerned with maximizing the economic recovery of hydrocarbons from the subsurface. Of particular interest to reservoir engineers is generating accurate reserves estimates for use in financial reporting studies. While the survey is primarily design for the Canyon Reef, the Company fully expects it also to shed additional insight into the shallow intervals. Parallel anticipates that it will spend on this project, net to its 66% working interest, approximately $8.0 million over the next three years, of which $1.9 million is budgeted for 2004. However, this program and its expenditures could be accelerated if future deepenings exceed the Company's current economic model. Onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. Gulf Coast of South Texas This area contributed 29% of Parallel's production during the first quarter 2004 and represented 12% of its reserve value as of December 31, 2003. From 1993 to June 2002, this area had been the Company's primary focus. However, because of the high decline rate and short-lived reserves, Parallel is decreasing its investment in this area and is now re-deploying a majority of the cash flow from this area to the acquisition, development and exploitation of longer life oil and gas reserves. Yegua/Frio Gas Project, Jackson and Wharton Counties -- The Cornelius No. 1, a Frio well, was drilled to a total depth of 16,000 feet and deemed to be non-commercial at that depth. A completion is being attempted in a shallower sand at approximately 11,900 feet; however, based on current test results, it appears to be marginal. Parallel's working interest in the well is approximately 20%. As the Company announced on May 7, 2004, a Yegua well, the Overpass No. 1, Jackson County, Texas Jackson County is a county located in the U.S. state of Texas. In 2000, its population was 14,391. Its county seat is Edna6. Jackson County is named for Andrew Jackson, President of the United States from 1829 to 1837. Geography According to the U.S. , was drilled to a total depth of 11,200 feet and is producing from the Yegua formation from perforations between 10,692 an 10,784 feet. During testing, the well flowed at a rate of 1.7 million cubic feet of gas per day plus 235 barrels of condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. per day on a 9/64-inch choke (jargon) choke - To fail to process input or, more generally, to fail at any endeavor. E.g. "NULs make System V's "lpr(1)" choke." See barf, gag. with flowing tubing pressure of 5,250 pounds per square inch Noun 1. pounds per square inch - a unit of pressure psi pressure unit - a unit measuring force per unit area . Sales from the well are expected to begin within the next 30 days at an anticipated rate of 3.0 million cubic feet of gas per day plus an estimated 400 barrels of condensate per day, which is approximately 1.2 million cubic feet equivalents of gas per day, net to the Company's interest. Parallel owns a 30% working interest (22.5% net revenue interest) in the well. Privately held Allegro (operating system) Allegro - The code name for the major Mac OS release due in mid-1998. http://devworld.apple.com/mkt/informed/appledirections/mar97/roadmap.html. Investments Inc., the operator, and other private investors own the remaining interests. The Company expects drilling operations to begin on the Thunderbird thunderbird In North American Indian mythology, a powerful spirit in the form of a bird that watered the earth and made vegetation grow. Lightning was believed to flash from its eyes or beak, and the beating of its wings was thought to represent rolling thunder. No. 1 Yegua well within the next 30 days. The 3-D seismic interpretation on this well is comparable to the Overpass No. 1 well located approximately five miles away. Parallel owns a 38% working interest (28.5% net revenue interest) in the well. East Texas Cook Mountain Gas Project, Liberty County -- This project commenced in 2002 and contributed 10% of Parallel's first quarter 2004 production and represented 3% of its reserve value as of December 31, 2003. The Henderson "A" No. 1 well was drilled to a total depth of 15,400 feet and deemed to be non-commercial at that depth. A completion was attempted in the Yegua sand at approximately 9,900 feet and was also non-commercial. The well will be plugged. Parallel's working interest in the well is approximately 9%. Currently, the Company is participating in three Cook Mountain wells with small working interests ranging from 2% to 5%. One well has been completed and is awaiting pipeline connections and two wells are drilling. The Company has revised its budget and plans to spend $0.5 million for the drilling of these prospects, the majority of which will be spent in 2004. New Projects All four of the following new projects have been acquired since June 2002 and no production or proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. was recognized on these projects as of December 31, 2003. Developmental Projects: North Texas Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square Gas Project, Tarrant County -- Currently, Parallel does not have any production in the Barnett Shale. Parallel's Barnett Shale gas project is located in Tarrant County, Texas Tarrant County is a county located in the U.S. state of Texas. As of 2000, the population was 1,446,219. Its county seat is Fort Worth6. Tarrant County is the second most populous county in the Dallas/Fort Worth Metroplex and contains its second largest principal city. , between the Newark East Barnett Shale gas field to the north in Tarrant County and the Cleburne Barnett Shale gas field to the south in Johnson County Johnson County is the name of several counties in the United States:
Parallel's current leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. leasehold n. on the project is approximately 5,000 gross (1,400 net) acres and additional acreage continues to be acquired. To date, the Company has drilled one vertical well that is waiting on completion and pipeline connection. The Company anticipates that its drilling activity on this project will resume during the second half of 2004. Parallel expects this project to become a multi-well, long-life gas project that will be developed over the next three years. The Company estimates that it will spend on this project, net to its 28% working interest, approximately $16.0 million over the next three years, of which $2.0 million is budgeted for 2004. New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). Gas Project -- This project consists of approximately 50,000 gross (4,250 net) acres with the primary target being the Abo formation at a depth of approximately 5,000 feet. The Abo formation is a known natural gas-producing reservoir but historically has been marginally economic due to low per-well producing rates and low natural gas prices. Since December 2003, Parallel has participated in three Abo gas wells that have been drilled and are awaiting pipeline connections. Parallel believes this project's proven reservoir can be more efficiently exploited through the application of new horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal and hydraulic fracture fracture, breaking of a bone. A simple fracture is one in which there is no contact of the broken bone with the outer air, i.e., the overlying tissues are intact. In a comminuted fracture the bone is splintered. stimulation technologies. Depending on production results, the Company expects accelerated development in 2004 of this potentially long-life gas project. Parallel's working interest in the project is approximately 8.5%. The Company's current budget on this project for 2004 is approximately $0.8 million. Exploratory Projects: Cotton Valley Reef Gas Project -- Parallel owns an approximate 13.125% working interest in this 3-D seismic gas project which can be characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by a higher risk profile than the Company's other projects it is currently involved in. The objective is the Cotton Valley barrier reef barrier reef n. A long, narrow ridge of coral or rock parallel to and relatively near a coastline, separated from the coastline by a lagoon too deep for coral growth. facies facies /fa·ci·es/ (fa´she-ez) pl. fa´cies [L.] 1. the face. 2. surface; the outer aspect of a body part or organ. 3. expression (1). found between the depths of 16,000 and 18,000 feet on the flank flank (flank) the side of the body between ribs and ilium. flank n. 1. The side of the body between the pelvis or hip and the last rib; the side. 2. of the East Texas Basin as it existed in the Jurassic time. Within five to twelve miles of this project are seven Cotton Valley lagoonal patch reef facies gas fields. These seven fields have produced 175 Bcf of gas since 1986 and currently produce approximately 16 MMcf of gas per day from nine wells. This project targets much larger, seaward barrier reef facies. The project consists of approximately 5,000 gross (650 net) acres. The first well is currently drilling at approximately 6,400 feet with an estimated objective total depth of 18,000 feet. The Company has budgeted approximately $1.4 million in 2004, net to its working interest, for the drilling of the first prospect within the 5,000-acre project. Since Parallel's news release dated March 16, 2004, the Company has acquired an additional interest in this project, which has increased its working interest to 13.125%. Utah Oil and Gas Project -- Parallel has increased its acreage position in this project to approximately 125,000 gross acres. It is a multiple zone project consisting of both oil and gas targets at a depth of less than 6,000 feet. The Company continues to build its leasehold position and geological data base. Parallel expects to spud the first well as soon as sufficient geophysical ge·o·phys·ics n. (used with a sing. verb) The physics of the earth and its environment, including the physics of fields such as meteorology, oceanography, and seismology. data can be collected and interpreted, which could be as early as late in the second half of 2004. Parallel owns and operates 100% of this project and estimates that the cost to drill a well to casing point will be approximately $300,000. The Company's 2004 budget on this project is approximately $1.0 million. Parallel has budgeted approximately $5.1 million in 2004, which it plans to spend on its existing projects in the Permian Basin of West Texas and New Mexico. Management Comments Larry C. Oldham, Parallel's President, commented, "In June 2002, our business strategy was changed to target the acquisition, development and exploitation of long-life oil and gas reserves in order to grow shareholder value on a consistent long-term basis. As we accelerate our development programs in the Fullerton, Diamond M Shallow and Diamond M Canyon oil projects, and begin drilling on our new gas projects in New Mexico, Barnett Shale, and Cotton Valley Reef, we expect to see increases in our production and oil and gas reserve base. This existing portfolio of projects is well-balanced in terms of geography, commodity, and risk." Earnings Release, Conference Call and Webcast Information Parallel's announcement of its financial results for the first quarter ended March 31, 2004, is expected to be released after the market closes on Thursday, May 13, 2004. The Company's management will host a conference call to discuss its financial and operational results for the first quarter ended March 31, 2004, on Friday, May 14 2004, at 10:00 a.m. Central time. To participate in the call, dial 1-800-884-5695 or 1-617-786-2960, Participant Passcode 74027939, at least five minutes before the scheduled start time. The conference call will also be webcast, complete with the "Current Slide Presentation," and can be accessed live at Parallel's Web site, www.parallel-petro.com. A replay of the conference call will be available at the Company's Web site or by calling 1-888-286-8010 or 1-617-801-6888, Passcode 12099787. The Company Parallel Petroleum Corporation is headquartered in Midland, Texas Midland is the county seat of Midland CountyGR6 located on the Southern Plains of the western area of the U.S. State of Texas. As of the 2006 U.S. Census estimate, the city had a total population of 102,073. and is an independent energy company primarily engaged in the acquisition, development, exploration and production of oil and gas using enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] techniques and 3-D seismic technology. Additional information on Parallel Petroleum Corporation is available at www.parallel-petro.com. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. subject to various risks and uncertainties that could cause the company's future plans, objectives and performance to differ materially from those in the forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "subject to," "anticipate," "estimate," "continue," "present value," "future," "reserves", "appears," "prospective," or other variations thereof or comparable terminology. Factors that could cause or contribute to such differences could include, but are not limited to, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the results of exploratory drilling activity, the company's growth strategy, changes in oil and natural gas prices, operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. , availability of drilling equipment, outstanding indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , changes in interest rates, dependence on weather conditions, seasonality, expansion and other activities of competitors, changes in federal or state environmental laws and the administration of such laws, and the general condition of the economy and its effect on the securities market. While we believe our forward-looking statements are based upon reasonable assumptions, these are factors that are difficult to predict and that are influenced by economic and other conditions beyond our control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the company with the Securities and Exchange Commission. |
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