Parallel Petroleum Announces Third Quarter 2006 Financial Results.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. -- Parallel Petroleum Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :PLLL) today announced its financial results for the third quarter ended September 30, 2006, compared to the results for the same period in 2005. In a separate press release issued today, Parallel announced its operations update and third quarter 2006 production and 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. . Third Quarter Financial Results For the three months ended September 30, 2006, Parallel reported net income of $11.0 million, or $0.30 per diluted share. Included in net income was a $10.6 million pre-tax, non-cash gain related to the change in fair market value of derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and ineffective portion of hedges. For the three months ended September 30, 2005, Parallel recorded net income of $2.0 million, or $0.06 per diluted share. Included in net income for the three months ended September 30, 2005 was a $9.0 million pre-tax, non-cash loss related to the change in fair market value of derivative instruments and ineffective portion of hedges. For the third quarter of 2006, Parallel's oil and natural gas sales were 282 MBbls of oil and 2,001 MMcf of natural gas, or 616 MBOE MBOE Thousands of Barrels of Oil Equivalent MBOE Milford Board of Education , a 43% increase when compared to the third quarter of 2005. During this period, the average prices the Company received for its oil and natural gas on an unhedged basis were $64.53 per barrel and $5.64 per Mcf, or $47.91 per 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 ($42.58 per BOE, hedged). For the same period of 2005, oil sales were 247 MBbls at an average unhedged price of $58.95 per barrel and natural gas sales were 1,109 MMcf at an average unhedged price of $9.88 per Mcf, or 432 MBOE at an average unhedged price of $59.09 per BOE ($50.60 per BOE, hedged). Nine Months Results For the nine months ended September 30, 2006, Parallel reported net income of $15.1 million, or $0.42 per diluted share. Included in net income was a $0.6 million pre-tax, non-cash gain related to the change in fair market value of derivative instruments and ineffective portion of hedges. For the nine months ended September 30, 2005, Parallel recorded a net loss of $10.0 million, or a loss of $0.32 per diluted share. Included in the net loss for the nine months ended September 30, 2005 was a $33.5 million pre-tax, non-cash loss related to the change in fair market value of derivative instruments and ineffective portion of hedges. For the nine months ended September 30, 2006, Parallel's oil and natural gas sales were 848 MBbls of oil and 4,894 MMcf of natural gas, or 1,664 MBOE, a 55% increase when compared to the nine months ended September 30, 2005. The average prices the Company received for its oil and natural gas on an unhedged basis were $61.88 per barrel and $6.11 per Mcf, or $49.50 per BOE ($43.93 per BOE, hedged). For the same period of 2005, oil sales were 672 MBbls at an average unhedged price of $50.86 per barrel and natural gas sales were 2,411 MMcf at an average price of $8.01 per Mcf, or 1,074 MBOE at $49.81 per BOE ($41.46 per BOE, hedged). Net cash provided by operating activities for the nine-month period ended September 30, 2006, was $44.6 million, compared to $23.1 million for the same period of 2005. The 93% increase was primarily related to increased oil and gas production volumes, increased oil prices, and an increase in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. offset by an increase in current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. , primarily related to vendor payables and joint interest receivables associated with the Company's increased drilling activities. Balance Sheet Review At September 30, 2006, current assets were $34.3 million, which included $0.3 million of cash. Current liabilities were $41.6 million, including current derivative obligations of $15.5 million. Long-term liabilities Long-Term Liabilities Recorded on the balance sheet, a company's liabilities for leases, bond repayments and other items due in more than one year. Notes: A company's long-term liabilities are accounted for by its debt obligations to other parties which last longer than were $185.8 million, including $147.0 million of debt and $16.7 million of derivative obligations. The Company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility had a borrowing base of $156.0 million as of October 1, 2006, and outstanding borrowings under the revolving credit facility as of that same date were $97.0 million. The Company's borrowing base is expected to increase to approximately $167.0 million during the fourth quarter of 2006. In addition, the Company had $50.0 million outstanding under its second lien A Second lien financing is a form of financing secured on a second ranking basis by (more or less) the same security, which secures the first ranking financing. The first lien lenders and the second lien lenders agree that, in the event of a security enforcement or bankruptcy, the term loan facility. As of September 30, 2006, the Company's net capitalized costs associated with its oil and gas properties and other equipment were $347.2 million. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $171.1 million, which included $1.5 million of accumulated other comprehensive loss related to the Company's hedging activities. Common Stock Offering Parallel announced on August 16, 2006 that it completed the sale of 2,500,000 shares of its common stock at a public offering price of $25.25 per share, resulting in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $60.25 million. Jefferies & Company, Inc. acted as sole underwriter for the offering. The common shares were issued under Parallel's universal shelf registration statement. Parallel used the net proceeds from the offering for general corporate purposes, including debt repayment and the acceleration of its drilling and completion operations in certain core areas such as its 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, 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). Wolfcamp gas and 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. west Texas oil properties. Sale of West Fork West Fork may be:
Parallel announced on October 12, 2006 that West Fork Pipeline Company I, LP had agreed to sell certain assets to Texas Midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. Gas Services, L.L.C., an affiliate of Chesapeake Energy Chesapeake Energy (NYSE: CHK) is a producer of natural gas in the United States and according to their 3Q 2007 report, is the largest independent producer, third overall (including majors) and the most active driller of new wells in the US. Corporation. Parallel, as a limited partner in West Fork Pipeline Company I, LP, agreed to the sale and received approximately $16.0 million allocable to its limited partnership interest. Parallel's share of the gain on the sale is expected to be $10.0 million, pre-tax, which will be realized in the fourth quarter of 2006. Management Comments Larry C. Oldham, Parallel's President, commented, "In spite of a volatile oil volatile oil n. A rapidly evaporating oil of plant derivation, especially an essential oil, that is capable of distillation and that does not leave a stain. Also called ethereal oil. and gas pricing environment, we had a very successful third quarter and nine months ended September 30, 2006 in terms of increased earnings, increased production and increased net cash provided by operating activities. Our average daily production volumes increased 43% when compared to the third quarter of 2005, 37% when compared to the fourth quarter of 2005, and 4% when compared to the second quarter of this year. In early July, we recognized an opportunity to hedge additional oil volumes. We collared 1.2 million barrels of oil at what we believed to be very attractive prices, with floors of $65.00 per barrel and caps ranging from $92.00 to $79.60 per barrel through October 31, 2010. Please see our press release dated July 12, 2006 for information pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to these oil derivatives." Oldham further stated, "Having reduced our bank debt with a portion of the proceeds from our $60 million stock offering and $16 million pipeline sale, our improved liquidity and capital position will allow us to continue our accelerated drilling in the Barnett Shale and in New Mexico with even more confidence. If the borrowing base under our revolving credit facility is increased, our aggressive drilling plans may be further enhanced." Conference Call and Webcast Information The Company's management will host a conference call to discuss current operations, production, reserves and financial results for the third quarter ended September 30, 2006. In addition to this press release, please refer to the Company's operations update press release also dated November 8, 2006 and its Form 10-Q Form 10-Q See 10-Q. Report for the quarterly period ended September 30, 2006 that was filed with the Securities and Exchange Commission on November 8, 2006. The conference call will be held on Thursday, November 9, 2006, at 10:00 a.m. Eastern time (9:00 a.m. Central time). To participate in the call, dial 800-299-0148 or 617-801-9711, Participant Passcode 28055312, at least five minutes before the scheduled start time. The conference call will also be webcast with slides, and can be accessed live at Parallel's web site, http://www.plll.com. A replay of the conference call will be available at the Company's web site or by calling 888-286-8010 or 617-801-6888, Passcode 10845686. FINANCIAL STATEMENTS AND SCHEDULES FOLLOW [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] The Company Parallel Petroleum is an independent energy company headquartered in Midland, Texas, engaged in the acquisition, exploration, development and production of oil and gas using 3-D seismic technology and advanced drilling, completion and recovery techniques. Parallel's primary areas of operation are the Permian Basin of West Texas and New Mexico, North Texas Barnett Shale, Onshore Gulf Coast of South Texas, East Texas and Utah/Colorado. Additional information on Parallel Petroleum Corporation is available at http://www.plll.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," "plan," "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, availability of drilling equipment, outstanding indebtedness, weaknesses in the Company's internal controls, the inherent variability in early production tests, 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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