Parallel Petroleum CORRESP Correspondence with SEC

LYNCH, CHAPPELL & ALSUP
A PROFESSIONAL CORPORATION
ATTORNEYS
THE SUMMIT, SUITE 700
300 NORTH MARIENFELD
MIDLAND, TEXAS 79701
(432) 683-3351
TELECOPIER (432) 683-8346

May 2, 2007

VIA EDGAR (as correspondence) and FEDERAL EXPRESS

Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549-7010

Attention: Lily Dang, Division of Corporation Finance


		Re:		Parallel Petroleum Corporation
				Annual Report on Form 10-K for the fiscal year ended December 31, 2006
				Filed February 28, 2007
				File No. 000-13305

Dear Ladies and Gentlemen:

We write this letter on behalf of Parallel Petroleum Corporation (“Parallel”) to respond to the comment letter received from the Staff on April 16, 2007, relating to the above-referenced Annual Report on Form 10-K of Parallel.

We have numbered each of Parallel’s responses to correspond to the numbering of the comments in the Staff’s comment letter. We have repeated each comment immediately preceding Parallel’s response for the convenience of the Staff. As discussed with the Staff, we are including with this letter a draft amendment on Form 10-K/A (the “Amendment”) to the Parallel Annual Report on Form 10-K.

Subject to any additional comments or questions the Staff may have, the changes described below will be made in the Amendment to be filed by Parallel.

Form 10-K for the Fiscal Year Ended December 31, 2006

Management’s Discussion and Analysis, page 29

Critical Accounting Policies and Practices, page 32

Depletion, page 33

Please expand your discussion of the unit of production method to specify the components included in your amortized costs, taking into consideration the guidance of Regulation S-X Rule 4-10(c)(3)(i). Please also describe the assumptions and uncertainties underlying your estimates, and identify any material changes implemented during the periods presented. Make similar revision to your disclosure on page F-8.

Response.

		Parallel has expanded and revised the disclosure on page 33 of the Amendment and similar revisions have been made on pages F-8 and F-9 in response to this comment.

		Please note, as described in the expanded and revised disclosures, that there have been no material changes in Parallel’s methodology of calculating depletion of oil and gas properties under the full cost method during the three years ended December 31, 2006.

Costs and Expenses, page 35

Please expand your depreciation and depletion expense variance analysis to discuss the extent to which proved undeveloped property purchases and/or changes in estimates of future development or production costs affected your depletion expense variance.

Response.

Parallel has expanded and revised the disclosure in response to this comment. See page 36 of the Amendment.

Financial Statements

Statements of Cash Flows, page F-6

We note that for year 2006, on the line items labeledReturn on investment in pipelines and gathering system ventures, you show a $9 million positive adjustment to net income in the Cash flows from operating activities section, and a $7.7 million inflow in the Cash flows from investing activities section. Please tell us why you separated the return amount into these two cash flow categories, and reconcile the amounts to the corresponding activity reflect in your Statements of Operations on page F-4, the change in the account balance depicted in your Balance Sheets on page F-3, and the information in Note 7 on pages F-17 and F-18. Submit the revisions you would propose to clarify this matter.

Response.

		As discussed in Note 7 to Parallel’s financial statements, in the fourth quarter 2006, two of Parallel’s equity method investees, West Fork Pipeline I and West Fork Pipeline V sold substantially all of their assets, resulting in gains. Parallel received distributions of $16.0 million and $683,000, respectively, as a result of these asset sales. The total of these distributions of approximately $16.7 is reported in the accompanying statement of cash flows for 2006 in “Cash flows from operating activities” as “Return on investment in pipelines and gathering systems ventures” in the amount of $9.0 million representing the excess of distributions received over Parallel’s cash investments in these ventures, and in “Cash flows from investing activities” as “Return of investment in pipelines and gathering systems ventures” in the amount of $7.7 million representing the return through distribution of Parallel’s previous cash investments in the two joint ventures. Parallel has separated the amount of “Return on investment in pipelines and gathering systems ventures” located in “Cash flows from operating activities” from the amount of “Return of investment in pipelines and gathering systems ventures” in order to comply with paragraphs 16.b. and 22.b of Statement of Financial Accounting standards No. 95 (“SFAS 95”).

		Paragraph 16.b. of SFAS 95 states that investing cash inflows include “receipts from sales of equity instruments of other enterprises (other than certain equity instruments carried in a trading account as described in Statement 102, and certain securities classified as trading securities as discussed in Statement 115) and from returns of investment in those instruments”. The amount of $7,724,000 included as “Return of investment in pipelines and gathering systems ventures” represents the return, by cash distribution, of Parallel’s previous joint venture investments (or “equity instrument”) in the two joint ventures whose assets were sold in 2006.

		Paragraph 22. b. of SFAS 95 states that cash inflows from operating activities include “cash receipts from returns on loans, other debt instruments of other entities, and equity securities—interest and dividends”. The amount of cash received as return on Parallel’s joint venture investment (or “equity securities”) – meaning the amount of distributions from these joint ventures in excess of Parallel’s cash investments – is represented by the amount of $9,000,000 reflected as “Return on investment in pipelines and gathering systems ventures” located in cash flows from operating activities.

		Income statement activity –The income statement amount of “Equity in income (loss) of pipelines and gathering system ventures” of $8,593,000 reconciles directly to the cash flow statement amount of “Equity (income) loss in pipelines and gathering system ventures.”

		Balance sheet reconciliation– The increase in the amount of “Investment in pipelines and gathering system ventures” on the balance sheet from December 31, 2005 to December 31, 2006 of $3,128,000 reconciles to the amounts contained in the 2006 statement of cash flows in the following manner:


	(in thousands)
Beginning balance of “Investment in pipelines and gathering system ventures”	$	3,326
Cash flow from operating activities:
Equity (income) loss in pipelines and gathering system ventures		8,593
Return on investment in pipelines and gathering system ventures		(9,000	)
Cash flow from investing activities:
Investment in pipelines and gathering system ventures		11,260
Return of investment in pipelines and gathering system ventures		(7,724	)
Rounding difference		(1	)

Ending balance of “Investment in pipelines and gathering system ventures”		6,454

Reconciliation to Footnote7 — The total amounts in the Footnote 7 (beginning on page F-17 of the Amendment) table designated as “Our equity investments consisted of the following:” agree with the amounts of “Investment in pipelines and gathering system ventures” on the balance sheet of $6,454,000 and $3,326,000 as of December 31, 2006 and 2005, respectively. The total amount of “earnings from equity investments” of $8,593,000 from Footnote 7 (appearing on page F-19 of the Amendment) agrees with the income statement amount of “Equity in income (loss) of pipelines and gathering system ventures.”

As to the amounts of distributions from West Fork Pipeline Company I, L.P. of $16.6 million and West Fork Pipeline Company II, L.P. and West Fork Pipeline Company V, L.P of $683,000 contained in the first paragraph of Footnote 7, the amount of distributions from West Fork Pipeline Company I, L.P. should have been stated as $16.0 but was shown as $16.6 million through a clerical error. The total amount of these distributions of $16.7 million, as corrected, reconciles to the total amount of “Return on investment in pipelines and gathering system ventures” of $9.0 million and the amount of “Return of investment in pipelines and gathering system ventures” of $7.7 million.

Proposed clarification and correction to Footnote 7- Parallel proposes to make the changes to Footnote 7 as indicated by the marked changes on pages F-17 and F-18 of the Amendment.

Note (11) Stock Compensation, Warrants and Rights, page F-23

(c) Stock Rights, page F-27

Please expand your disclosure to state the purpose of your stock right dividend, and to explain how the stock right provisions serve that purpose. Additionally, please disclose your method of accounting for these stock rights, along with any actual and anticipated effects on your results of operations.

Response.

Parallel has expanded and revised the disclosure to address this comment. See pages F-27 and F-28 of the Amendment.

Note (15) Commitments and Contingencies, page F-29

We note you disclose that on December 30, 2005, you were named as a defendant in a lawsuit filed by AFE Oil and Gas, LLC, but that you have not established a reserve for this legal contingency as of December 31, 2006. Please expand your disclosure to clarify whether you have not established a reserve because the loss is not deemed probable, or because it is not reasonably estimable. To the extent it is not probable but estimable, disclose the range of reasonably possible loss.

Response.

		A reserve had not been established as of December 31, 2006 because Parallel believed the likelihood of a material loss to be remote, as evidenced by the dismissal of the lawsuit on February 27, 2007.

		Parallel has revised the disclosure to address this comment. See pages F-29 and F-30 of the Amendment. Page 26 of the Amendment has been similarly revised.

Engineering Comments

General

Please provide us a copy of your 2006 detailed reserve report, preferably on CD-ROM or other electronic medium.

Response.

A copy of Parallel’s 2006 detailed reserve report, on CD-ROM, accompanies the manually signed copy of this letter being sent to the Staff by overnight delivery.

Supplemental Oil and Natural Gas Reserve Data, page F-31

7. We note numerous significant reserve changes in your reserve table. However, there are no explanations of these changes. Please amend your document to state the reasons for the significant reserve changes, as required under paragraph 11 of SFAS 69.

Response.

Parallel has revised the disclosure in Footnote 16 to explain the reasons for significant increase in proved undeveloped reserves in 2006 and the significant reserve revisions in each annual period. Through Parallel’s review process, Parallel noted a clerical error on proved developed extensions and discoveries and revisions of previous estimates in 2006 of 4,099 Mcf which has been adjusted. This adjustment did not affect end of year reserve evaluations or the standardized measurement disclosure. See pages F-31 and F-32 of the Amendment.

We note that your proved undeveloped reserves have increased from 26% of your total proved reserves at the end of 2003 to 48% at the end of 2006. Please provide us with a graph or table that stratifies your undeveloped reserves, showing for each year in which such reserves were originally booked as proved, both the quantities of those reserves established in the period and those remaining as undeveloped each year thereafter, including identification of the properties, and aggregation of the totals for each year-end. Also please explain the reasons your undeveloped reserves increased from 35% in 2005 to 48% at the end of 2006, and address the following points:

	(a)		Tell us how many reserves you have converted from proved undeveloped to proved developed in each of the last three years as a result of spending development costs of $107.3 million from 2004 through 2006, as disclosed on page F-13.

	(b)		Tell us whether you have limited your proved undeveloped reserves to one offset location away from a well with proved reserves in all instances. If not, tell us the circumstances of each case where you have gone beyond one offset location away from an economic well in quantifying undeveloped reserves.

	(c)		Tell us how many undeveloped well locations offsetting a horizontal well are typically associated with the booking of undeveloped reserves.

Response.

As requested, we have enclosed with this letter asAnnex A a table that stratifies Parallel’s undeveloped reserves, which shows:

	•		each year in which such reserves were originally booked as proved;

	•		the quantities of those reserves established in the period and those remaining as undeveloped each year thereafter;

	•		the identification of the properties; and

•

the aggregation of the totals for each year-end.

		Parallel’s proved undeveloped reserves increased from 35% in 2005 to 48% at the end of 2006 primarily as a result of its successful drilling program as described in revised Footnote 16 on pages F-31 and F-32 of the Amendment, as revised in response to comment 7 above.

		In response to your specific questions (a), (b), and (c), please refer to the following items:

(a)

In summary, the following reserves were transferred from the proved undeveloped category to proved developed in the following amounts during the three years ended December 31, 2006:


	Barrels		Mcf of
Year ended	of Oil		Natural Gas
December 31,	(in thousands)
2004		1,671		108
2005		875		308
2006		4,335		7,769

		6,881		8,185

			Please see the attached analysis of proved undeveloped reserves (Annex A) for a more detailed reconciliation.

	(b)		Parallel’s proved undeveloped reserves are limited to one offset location away from a well with proved developed reserves.

	(c)		Proved undeveloped reserve locations offsetting horizontal wells are limited to direct/diagonal offset locations. The actual number of proved undeveloped locations may be limited by lease ownership and proximity to other developed locations. The actual number of recognized proved undeveloped locations may be as few as 1 or as many as 8 depending on these factors.

Standardized Measure of Discounted Future Net Cash Flows, page F-32

We note that in each of the three years shown, your future production costs calculate to be $15.73, $14.24 and $11.98 per barrel of oil equivalent, based on your proved reserves at the end of 2006, 2005 and 2004, respectively. Please disclose the reason you utilized these prices in the Standardized Measure, while reporting average lifting costs of $9.91, $9.24 and $8.06 per barrel equivalent produced for the same years in the Business section on page 8; and $7.55, $6.54 and $6.26 in MD&A on pages 35 and 38.

Response.

		Parallel has expanded the disclosure in response to this comment. See pages 35, 38 and F-33 of the Amendment.

		Please note that the average lifting cost per BOE shown on page 8 of the Amendment has been revised from $9.91 to $10.06 as the result of a clerical error.

Changes in Standardized Measure of Discounted Future Net Cash Flows from Proved Reserves, page F-32

10.

Please explain to us the meaning of your disclosure in Footnote 1, concerning the changes you have apparently made in how you determine additional reserves in the categories of “Extensions and discoveries” and “improved recovery.”

Response.

During the preparation of Parallel’s “Changes in Standardized Measure of Discounted Future Net Cash Flows From Proved Reserves” for 2006, Parallel noted and corrected a programming error in a computer model previously used to assist in preparing Parallel’s disclosures. As a result of the programming error, the discounted amount of “Extensions and Discoveries” determined by analysis of Parallel’s reserve report information as determined in 2005 and 2004 was discounted by an additional 10% factor resulting in an understatement of the amount of “Extension and discoveries and improved recovery” disclosed in this table. Consequently, the amounts in 2005 and 2004 were revised to correct the error in calculation.

For the Staff’s convenience, the Amendment is accompanied by a Schedule showing the locations in the Amendment of the proposed changes, along with a brief description of the change on each page.

If any member of the Staff has questions regarding the foregoing or the Amendment, please contact Tommy Ortloff at (432) 683-3351 or (432) 688-1304.

We have included with this letter a written statement from Parallel containing the acknowledgments requested by the Staff.

Very truly yours,

Lynch, Chappell & Alsup

/s/ Thomas W. Ortloff

Thomas W. Ortloff

Enclosures (via Federal Express only)

cc: Lily Dang (SEC)(w/encl.)

ANNEX A

(Comment No. 8)

ANNEX “A”

PARALLEL PETROLEUM CORPORATION

PROVED DEVELOPED RESERVES — RECONCILIATION


					DIAMOND M				DIAMOND M												OTHER PERMIAN				BARNETT SHALE				NEW MEXICO				SOUTH TEXAS
	FULLERTON FIELD				DEEP UNIT				SHALLOW FIELD				CARM-ANN FIELD				HARRIS FIELD				AREA				PROJECT				PROJECT				PROJECT				TOTALS
			GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS				GAS
	OIL (BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		OIL (BBL)		(MCF)
2004
RESERVES @ 12/31/03		7,453,509		1,703,712		366,100		173,970		253,519		18,827		0		0		0		0		660,733		4,252,331		0		0		0		0		209,726		5,916,750		8,943,587		12,065,590
PRODUCTION		504,056		107,047		38,837		58,323		33,094		11,106		17,282		8,852		0		0		67,206		508,432		0		0		0		29,018		68,061		1,967,609		728,536		2,690,387
TRANSFERS TO PDP		542,149		108,430		0		0		1,128,471		0		0		0		0		0		0		0		0		0		0		0		0		0		1,670,620		108,430
PURCHASES		2,138,772		277,257		0		0		0		0		917,975		455,291		0		0		0		0		0		0		0		0		0		0		3,056,747		732,548
ADDITIONS		0		0		0		0		200,497		0		0		0		0		0		11,451		489,365		0		0		0		199,724		123,738		3,152,388		335,686		3,841,477
SALES		0		0		0		0		0		0		0		0		0		0		13,737		84,272		0		0		0		0		4,630		383,594		18,367		467,866
REVISIONS		-45,857		-296,187		-45,054		370,747		-81,022		342,700		0		0		0		0		135,018		398,103		0		0		0		0		-12,493		-1,247,276		-49,408		-431,913
RESERVES @ 12/31/04		9,584,517		1,686,165		282,209		486,394		1,468,371		350,421		900,693		446,439		0		0		726,259		4,547,095		0		0		0		170,706		248,280		5,470,659		13,210,329		13,157,879

2005
RESERVES @ 12/31/04		9,584,517		1,686,165		282,209		486,394		1,468,371		350,421		900,693		446,439		0		0		726,259		4,547,095		0		0		0		170,706		248,280		5,470,659		13,210,329		13,157,879
PRODUCTION		560,092		108,276		66,850		110,574		27,077		9,597		142,855		96,984		4,898		819		47,862		432,884		0		498,818		29		126,664		73,551		2,207,599		923,214		3,592,215
TRANSFERS TO PDP		0		0		352,741		170,680		0		0		522,449		137,863		0		0		0		0		0		0		0		0		0		0		875,190		308,543
PURCHASES		0		0		0		0		0		0		0		0		619,198		122,119		0		0		0		0		0		0		0		0		619,198		122,119
ADDITIONS		0		0		0		0		0		0		0		0		0		0		818		150,685		0		2,848,780		28		1,234,478		67,577		4,267,948		68,423		8,501,891
SALES		0		0		0		0		0		0		0		0		0		0		13,443		45,279		0		0		0		0		639		160,173		14,082		205,452
REVISIONS		-22,525		63,581		0		0		-519,994		-46,824		349,313		85,182		0		0		-19,072		-495,917		0		0		1		-23,520		-9,667		-629,335		-221,944		-1,046,833
RESERVES @ 12/31/05		9,001,900		1,641,470		568,100		546,500		921,300		294,000		1,629,600		572,500		614,300		121,300		646,700		3,723,700		0		2,349,962		0		1,255,000		232,000		6,741,500		13,613,900		17,245,932

2006
RESERVES @ 12/31/05		9,001,900		1,641,470		568,100		546,500		921,300		294,000		1,629,600		572,500		614,300		121,300		646,700		3,723,700		0		2,349,962		0		1,255,000		232,000		6,741,500		13,613,900		17,245,932
PRODUCTION		545,942		103,893		105,424		180,857		20,309		3,281		202,247		153,612		158,514		32,790		38,173		358,972		0		2,401,628		2,590		1,183,839		64,141		2,120,520		1,137,340		6,539,392
TRANSFERS TO PDP		425,300		85,000		654,600		654,600		0		0		319,267		149,783		2,929,899		581,097		0		0		0		5,923,700		0		0		6,098		374,408		4,335,164		7,768,588
PURCHASES		0		0		0		0		0		0		0		0		915,600		183,400		0		0		0		2,072,000		0		0		0		0		915,600		2,255,400
ADDITIONS		0		0		0		0		0		0		314,188		0		374,649		0		0		0		0		730,097		7,671		8,882,422		2,307		272,211		698,815		9,884,730
SALES		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0
REVISIONS		75,512		-64,361		-422,032		313,437		-343,463		-219,318		-233,947		507,559 -		2,391,755		-530,574		-189,176		107,824		0 -		1,575,963		2,722		727,089		8,201		-1,140,369		-3,493,938		-1,874,676
RESERVES @ 12/31/06		8,956,770		1,558,216		695,244		1,333,680		557,528		71,401		1,826,861		1,076,230		2,284,179		322,433		419,351		3,472,552		0		7,098,168		7,803		9,680,672		184,465		4,127,230		14,932,201		28,740,582

12/03 - 12/06 RECAP
RESERVES @ 12/31/03		7,453,509		1,703,712		366,100		173,970		253,519		18,827		0		0		0		0		660,733		4,252,331		0		0		0		0		209,726		5,916,750		8,943,587		12,065,590
PRODUCTION		1,610,090		319,216		211,111		349,754		80,480		23,984		362,384		259,448		163,412		33,609		153,241		1,300,288		0		2,900,446		2,619		1,339,521		205,753		6,295,728		2,789,090		12,821,994
TRANSFERS TO PDP		967,449		193,430		1,007,341		825,280		1,128,471		0		841,716		287,646		2,929,899		581,097		0		0		0		5,923,700		0		0		6,098		374,408		6,880,974		8,185,561
PURCHASES		2,138,772		277,257		0		0		0		0		917,975		455,291		1,534,798		305,519		0		0		0		2,072,000		0		0		0		0		4,591,545		3,110,067
ADDITIONS		0		0		0		0		200,497		0		314,188		0		374,649		0		12,269		640,050		0		3,578,877		7,699		10,316,624		193,622		7,692,547		1,102,924		22,228,098
SALES		0		0		0		0		0		0		0		0		0		0		27,180		129,551		0		0		0		0		5,269		543,767		32,449		673,318
REVISIONS		7,130		-296,967		-467,086		684,184		-944,479		76,558		115,366		592,741 -		2,391,755		-530,574		-73,230		10,010		0 -		1,575,963		2,723		703,569		-13,959		-3,016,980		-3,765,290		-3,353,422
RESERVES @ 12/31/06		8,956,770		1,558,216		695,244		1,333,680		557,528		71,401		1,826,861		1,076,230		2,284,179		322,433		419,351		3,472,552		0		7,098,168		7,803		9,680,672		184,465		4,127,230		14,932,201		28,740,582

-1-

PARALLEL PETROLEUM CORPORATION

PROVED UNDEVELOPED RESERVES — RECONCILIATION


					DIAMOND M				DIAMOND M												OTHER PERMIAN				BARNETT SHALE				NEW MEXICO				SOUTH TEXAS
	FULLERTON FIELD				DEEP UNIT				SHALLOW FIELD				CARM-ANN FIELD				HARRIS FIELD				AREA				PROJECT				PROJECT				PROJECT				TOTALS
			GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS		OIL		GAS				GAS
	OIL (BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		(BBL)		(MCF)		OIL (BBL)		(MCF)
2004
RESERVES @ 12/31/03		1,609,611		321,922		0		0		1,128,471		0		0		0		0		0		402,160		3,883,696		0		0		0		0		0		0		3,140,242		4,205,618
TRANSFERS TO PDP		-542,149		-108,430		0		0		-1,128,471		0		0		0		0		0		0		0		0		0		0		0		0		0		-1,670,620		-108,430
PURCHASES		403,718		80,743		0		0		0		0		1,521,187		618,669		0		0		0		0		0		0		0		0		0		0		1,924,905		699,412
ADDITIONS		0		0		820,998		820,998		2,220		0		0		0		0		0		0		0		0		0		0		0		0		0		823,218		820,998
REVISIONS		-1,537		-307		0		0		1,691,000		0		0		0		0		0		-201,080		-1,950,345		0		0		0		0		0		0		1,488,383		-1,950,652
RESERVES @ 12/31/04		1,469,643		293,928		820,998		820,998		1,693,220		0		1,521,187		618,669		0		0		201,080		1,933,351		0		0		0		0		0		0		5,706,128		3,666,946

2005
RESERVES @ 12/31/04		1,469,643		293,928		820,998		820,998		1,693,220		0		1,521,187		618,669		0		0		201,080		1,933,351		0		0		0		0		0		0		5,706,128		3,666,946
TRANSFERS TO PDP		0		0		-352,741		-170,680		0		0		-522,449		-137,863		0		0		0		0		0		0		0		0		0		0		-875,190		-308,543
PURCHASES						0		0		0		0		0		0		1,679,400		334,000		0		0		0		0		0		0		0		0		1,679,400		334,000
ADDITIONS		0		0		352,741		170,680		0		0		512,449		137,863		0		0		0		0		0		4,295,700		0		0		10,800		0		875,990		4,604,243
REVISIONS		184,457		36,772		19,202		19,202		-20,620		0		88,913		28,131		0		0		-80,480		-962,251		0		0		0		0		0		572,200		191,472		-305,946
RESERVES @ 12/31/05		1,654,100		330,700		840,200		840,200		1,672,600		0		1,600,100		646,800		1,679,400		334,000		120,600		971,100		0		4,295,700		0		0		10,800		572,200		7,577,800		7,990,700

2006
RESERVES @ 12/31/05		1,654,100		330,700		840,200		840,200		1,672,600		0		1,600,100		646,800		1,679,400		334,000		120,600		971,100		0		4,295,700		0		0		10,800		572,200		7,577,800		7,990,700
TRANSFERS TO PDP		-425,300		-85,000		-654,600		-654,600		0		0		-319,267		-149,783		-2,929,896		-581,092		0		0		0		-5,923,700		0		0		-6,098		-374,408		-4,335,161		-7,768,583
PURCHASES						0		0		0		0		0		0		2,354,400		471,600		0		0		0		1,628,000		0		0		0		0		2,354,400		2,099,600
ADDITIONS		341,868		67,968		467,370		467,370		0		0		3,751,689		2,034,530		2,922,245		230,389		0		0		0		10,694,098		0		14,779,900		0		0		7,483,172		28,274,255
REVISIONS		-1,158,213		-233,587		-20,557		-20,557		-241,862		0		255,472		648,958		1,994,244		135,153		-120,600		-971,100		0		0		0		0		0		0		708,484		-441,133
RESERVES @ 12/31/06		412,455		80,081		632,413		632,413		1,430,738		0		5,287,994		3,180,505		6,020,393		590,050		0		0		0		10,694,098		0		14,779,900		4,702		197,792		13,788,695		30,154,839

12/03 - 12/06 RECAP
RESERVES @ 12/31/03		1,609,611		321,922		0		0		1,128,471		0		0		0		0		0		402,160		3,883,696		0		0		0		0		0		0		3,140,242		4,205,618
TRANSFERS TO PDP		-967,449		-193,430		-1,007,341		-825,280		-1,128,471		0		-841,716		-287,646		-2,929,896		-581,092		0		0		0		-5,923,700		0		0		-6,098		-374,408		-6,880,971		-8,185,556
PURCHASES		403,718		80,743		0		0		0		0		1,521,187		618,669		4,033,800		805,600		0		0		0		1,628,000		0		0		0		0		5,958,705		3,133,012
ADDITIONS		341,868		67,968		1,641,109		1,459,048		2,220		0		4,264,138		2,172,393		2,922,245		230,389		0		0		0		14,989,798		0		14,779,900		10,800		0		9,182,380		33,699,496
REVISIONS		-975,293		-197,122		-1,355		-1,355		1,428,518		0		344,385		677,089		1,994,244		135,153		-402,160		-3,883,696		0		0		0		0		0		572,200		2,388,339		-2,697,731
RESERVES @ 12/31/06		412,455		80,081		632,413		632,413		1,430,738		0		5,287,994		3,180,505		6,020,393		590,050		0		0		0		10,694,098		0		14,779,900		4,702		197,792		13,788,695		30,154,839

-2-


							DIAMOND M						DIAMOND M																OTHER PERMIAN						BARNETT SHALE					NEW MEXICO					SOUTH TEXAS
	FULLERTON FIELD						DEEP UNIT						SHALLOW FIELD						CARM-ANN FIELD				HARRIS FIELD						AREA						PROJECT					PROJECT					PROJECT						TOTALS
				GAS			OIL				GAS		OIL			GAS			OIL		GAS		OIL			GAS			OIL			GAS			OIL		GAS			OIL		GAS			OIL			GAS						GAS
	OIL (BBL)			(MCF)			(BBL)				(MCF)		(BBL)			(MCF)			(BBL)		(MCF)		(BBL)			(MCF)			(BBL)			(MCF)			(BBL)		(MCF)			(BBL)		(MCF)			(BBL)			(MCF)			OIL (BBL)			(MCF)
2004
RESERVES @ 12/31/03		9,063,120			2,025,634			366,100				173,970		1,381,990			18,827			—		—		—			—			1,062,893			8,136,027			—		—			—		—			209,726			5,916,750			12,083,829			16,271,208
PRODUCTION		504,056			107,047			38,837				58,323		33,094			11,106			17,282		8,852		—			—			67,206			508,432			—		—			—		29,018			68,061			1,967,609			728,536			2,690,387
TRANSFERS TO PDP		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—
PURCHASES		2,542,490			358,000			—				—		—			—			2,439,162		1,073,960		—			—			—			—			—		—			—		—			—			—			4,981,652			1,431,960
ADDITIONS		—			—			820,998				820,998		202,717			—			—		—		—			—			11,451			489,365			—		—			—		199,724			123,738			3,152,388			1,158,904			4,662,475
SALES		—			—			—				—		—			—			—		—		—			—			13,737			84,272			—		—			—		—			4,630			383,594			18,367			467,866
REVISIONS		(47,394	)		(296,494	)		(45,054	)			370,747		1,609,978			342,700			—		—		—			—			(66,062	)		(1,552,242	)		—		—			—		—			(12,493	)		(1,247,276	)		1,438,975			(2,382,565	)
RESERVES @ 12/31/04		11,054,160			1,980,093			1,103,207				1,307,392		3,161,591			350,421			2,421,880		1,065,108		—			—			927,339			6,480,446			—		—			—		170,706			248,280			5,470,659			18,916,457			16,824,825
		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—

2005
RESERVES @ 12/31/04		11,054,160			1,980,093			1,103,207		��		1,307,392		3,161,591			350,421			2,421,880		1,065,108		—			—			927,339			6,480,446			—		—			—		170,706			248,280			5,470,659			18,916,457			16,824,825
PRODUCTION		560,092			108,276			66,850				110,574		27,077			9,597			142,855		96,984		4,898			819			47,862			432,884			—		498,818			29		126,664			73,551			2,207,599			923,214			3,592,215
TRANSFERS TO PDP		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—
PURCHASES		—			—			—				—		—			—			—		—		2,298,598			456,119			—			—			—		—			—		—			—			—			2,298,598			456,119
ADDITIONS		—			—			352,741				170,680		—			—			512,449		137,863		—			—			818			150,685			—		6,572,480			28		1,234,478			78,377			4,840,148			944,413			13,106,334
SALES		—			—			—				—		—			—			—		—		—			—			13,443			45,279			—		—			—		—			639			160,173			14,082			205,452
REVISIONS		161,932			100,353			19,202				19,202		(540,614	)		(46,824	)		438,226		113,313		—			—			(99,552	)		(1,458,168	)		—		572,000			1		(23,520	)		(9,667	)		(629,335	)		(30,472	)		(1,352,979	)
RESERVES @ 12/31/05		10,656,000			1,972,170			1,408,300				1,386,700		2,593,900			294,000			3,229,700		1,219,300		2,293,700			455,300			767,300			4,694,800			—		6,645,662			—		1,255,000			242,800			7,313,700			21,191,700			25,236,632
		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—

2006
RESERVES @ 12/31/05		10,656,000			1,972,170			1,408,300				1,386,700		2,593,900			294,000			3,229,700		1,219,300		2,293,700			455,300			767,300			4,694,800			—		6,645,662			—		1,255,000			242,800			7,313,700			21,191,700			25,236,632
PRODUCTION		545,942			103,893			105,424				180,857		20,309			3,281			202,247		153,612		158,514			32,790			38,173			358,972			—		2,401,628			2,590		1,183,839			64,141			2,120,520			1,137,340			6,539,392
TRANSFERS TO PDP		—			—			—				—		—			—			—		—		3			5			—			—			—		—			—		—			—			—			3			5
PURCHASES		—			—			—				—		—			—			—		—		3,270,000			655,000			—			—			—		3,700,000			—		—			—			—			3,270,000			4,355,000
ADDITIONS		341,868			67,968			467,370				467,370		—			—			4,065,877		2,034,530		3,296,894			230,389			—			—			—		11,424,195			7,671		23,662,322			2,307			272,211			8,181,987			38,158,985
SALES		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—
REVISIONS		(1,082,701	)		(297,948	)		(442,589	)			292,880		(585,325	)		(219,318	)		21,525		1,156,517		(397,511	)		(395,421	)		(309,776	)		(863,276	)		—		(1,575,963	)		2,722		727,089			8,201			(1,140,369	)		(2,785,454	)		(2,315,809	)
RESERVES @ 12/31/06		9,369,225			1,638,297			1,327,657				1,966,093		1,988,266			71,401			7,114,855		4,256,735		8,304,572			912,483			419,351			3,472,552			—		17,792,266			7,803		24,460,572			189,167			4,325,022			28,720,896			58,895,421
		—			—			—				—		—			—			—		—		—			—			—			—			—		—			—		—			—			—			—			—

12/03 - 12/06 RECAP
RESERVES @ 12/31/03		9,063,120			2,025,634			366,100				173,970		1,381,990			18,827			—		—		—			—			1,062,893			8,136,027			—		—			—		—			209,726			5,916,750			12,083,829			16,271,208
PRODUCTION		1,610,090			319,216			211,111				349,754		80,480			23,984			362,384		259,448		163,412			33,609			153,241			1,300,288			—		2,900,446			2,619		1,339,521			205,753			6,295,728			2,789,090			12,821,994
TRANSFERS TO PDP		—			—			—				—		—			—			—		—		3			5			—			—			—		—			—		—			—			—			3			5
PURCHASES		2,542,490			358,000			—				—		—			—			2,439,162		1,073,960		5,568,598			1,111,119			—			—			—		3,700,000			—		—			—			—			10,550,250			6,243,079
ADDITIONS		341,868			67,968			1,641,109				1,459,048		202,717			—			4,578,326		2,172,393		3,296,894			230,389			12,269			640,050			—		17,996,675			7,699		25,096,524			204,422			8,264,747			10,285,304			55,927,794
SALES		—			—			—				—		—			—			—		—		—			—			27,180			129,551			—		—			—		—			5,269			543,767			32,449			673,318
REVISIONS		(968,163	)		(494,089	)		(468,441	)			682,829		484,039			76,558			459,751		1,269,830		(397,511	)		(395,421	)		(475,390	)		(3,873,686	)		—		(1,003,963	)		2,723		703,569			(13,959	)		(3,016,980	)		(1,376,951	)		(6,051,353	)
RESERVES @ 12/31/06		9,369,225			1,638,297			1,327,657				1,966,093		1,988,266			71,401			7,114,855		4,256,735		8,304,572			912,483			419,351			3,472,552			—		17,792,266			7,803		24,460,572			189,167			4,325,022			28,720,896			58,895,421

-3-

PARALLEL PETROLEUM CORPORATION
1004 North Big Spring, Suite 400
Midland, Texas 79701
Ph: 432-684-3727
Fax: 432-684-3905

May 2, 2007

Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549-7010

Attn: Lily Dang, Division of Corporation Finance


Re:		Parallel Petroleum Corporation Form 10-K

Dear Ladies and Gentlemen:

In connection with our response to the comment letter received from the Staff on April 16, 2007 regarding the above referenced matter, Parallel Petroleum Corporation (the “Company”) hereby acknowledges that:

	•		the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

	•		staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

	•		the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.


	Very truly yours, Parallel Petroleum Corporation
	By:	/s/ Steven D. Foster
		Steven D. Foster, Chief Financial Officer

Parallel Petroleum Inactive CORRESPCorrespondence with SEC