| | | | | |
| | | | Exhibit 99.1 |
| | | PRESS RELEASE |
1004 N. Big Spring, Suite 400
Midland, TX 79701 (432) 684-3727
http://www.plll.com | | Contact: | | Cindy Thomason
Manager of Investor Relations
cindyt@plll.com |
| | | | | |
PARALLEL PETROLEUM ANNOUNCES
THIRD QUARTER 2007 FINANCIAL RESULTS
MIDLAND, Texas, (BUSINESS WIRE), November 9, 2007– Parallel Petroleum Corporation (NASDAQ: PLLL) today announced its financial results for the third quarter ended September 30, 2007, compared to the results for the same period in 2006. In addition to this press release, please refer to Parallel’s Form 10-Q Report for the quarter ended September 30, 2007 that was filed with the Securities and Exchange Commission on November 9, 2007. In a separate press release issued November 7, 2007, Parallel announced its field operations update.
Third Quarter Financial Results
For the three months ended September 30, 2007, Parallel reported net income of $0.3 million, or $0.01 per diluted share. Included in net income was a $4.6 million pre-tax loss on derivatives, which included settlements of $4.0 million. Parallel had no derivatives classified as hedges during the third quarter of 2007. Net income also included a $0.8 million non-cash write off of previously capitalized debt issuance costs associated with the Company’s Second Lien Term Loan that was retired with the proceeds of its senior notes offering. For the three months ended September 30, 2006, Parallel recorded net income of $11.0 million, or $0.30 per diluted share. Included in net income for the three months ended September 30, 2006 was a $10.3 million pre-tax gain on derivatives, which included settlements of $0.9 million and a gain on ineffective portion of hedges of $0.3 million.
For the third quarter of 2007, Parallel’s oil and natural gas sales were 254 MBbls of oil and 2,043 MMcf of natural gas, or 595 MBOE. During this period, the average prices the Company received for its oil and natural gas were $69.45 per barrel and $5.81 per Mcf, or $49.62 per BOE. For the same period of 2006, oil sales were 282 MBbls at an average unhedged price of $64.53 per barrel and natural gas sales were 2,001 MMcf at an average unhedged price of $5.64 per Mcf, or 616 MBOE at an average unhedged price of $47.91 per BOE ($42.58 per BOE, net of the effect of hedges).
When comparing the third quarter of 2007 to the third quarter of 2006, oil and gas operating revenues increased approximately 12% to $29.5 million and total costs and expenses increased approximately 9% to $18.2 million, which increased operating income approximately 18% to $11.3 million. Total costs and expenses increased primarily due to increases in lease operating expense, general and administrative expense, and depreciation, depletion and amortization costs. Interest expense increased approximately 62% to $5.4 million. Cost of debt retirement of $0.8 million represents the write off of previously capitalized debt issuance costs associated with the Company’s Second Lien Term Loan that was retired with the proceeds of its senior notes offering.
Nine Months Financial Results
For the nine months ended September 30, 2007, Parallel reported net income of $3.7 million, or $0.09 per diluted share. Included in net income was an $11.2 million pre-tax loss on derivatives, which included settlements of $9.9 million. Parallel had no derivatives classified as hedges during the nine months ended September 30, 2007. Net income also included a $0.8 million non-cash write off of previously capitalized debt issuance costs associated with the Company’s Second Lien Term Loan that was retired with the proceeds of its senior notes offering. For the nine months ended September 30, 2006, Parallel recorded net income of $15.1 million, or $0.42 per diluted share. Included in net income for the nine months ended September 30, 2006 was a $0.1 million pre-tax gain on derivatives, which included settlements of $3.6 million and a gain on ineffective portion of hedges of $0.5 million.
For the nine months ended September 30, 2007, Parallel’s oil and natural gas sales were 797 MBbls of oil and 5,243 MMcf of natural gas, or 1,671 MBOE. During this period, the average prices the Company received for its oil and natural gas were $59.98 per barrel and $6.14 per Mcf, or $47.86 per BOE. For the same period of 2006, oil sales were 848 MBbls at an average unhedged price of $61.88 per barrel and natural gas sales were 4,894 MMcf at an average unhedged price of $6.11 per Mcf, or 1,664 MBOE at an average unhedged price of $49.50 per BOE ($43.93 per BOE, net of the effect of hedges).
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 2
When comparing the nine months ended September 30, 2007 to the nine months ended September 30, 2006, oil and gas operating revenues increased approximately 9% to $80.0 million and total costs and expenses increased approximately 16% to $48.3 million, which increased operating income approximately 1% to $31.6 million. Total costs and expenses increased primarily due to increases in lease operating expense, general and administrative expense, and depreciation, depletion and amortization costs. Interest expense increased approximately 50% to $13.4 million. Cost of debt retirement of $0.8 million represents the write off of previously capitalized debt issuance costs associated with the Company’s Second Lien Term Loan that was retired with the proceeds of its senior notes offering.
When comparing the nine months ended September 30, 2007 to the nine months ended September 30, 2006, net cash provided by operating activities increased approximately 16% to $51.5 million, net cash used in investing activities decreased approximately 24% to $121.3 million, and net cash provided by financing activities decreased approximately 36% to $69.2 million.
Balance Sheet Review
At September 30, 2007, current assets were $39.1 million, which included $5.3 million of cash and cash equivalents. Current liabilities were $63.0 million, including current derivative obligations of $19.9 million. Long-term liabilities were $272.5 million, including $234.3 million of debt and $5.5 million of derivative obligations. The borrowing base under the Company’s revolving credit facility was $150.0 million as of September 30, 2007, and outstanding borrowings under the revolving credit facility at that same date were $89.0 million. In addition, the Company had $150.0 million outstanding under its senior notes. As of September 30, 2007, the Company’s net capitalized costs associated with its oil and gas properties and other equipment were $475.0 million. Stockholders’ equity was $190.1 million.
Management Comments
Larry C. Oldham, Parallel’s President, commented, “As we announced in our press release dated November 6, 2007, we received an examiner’s report from the Internal Revenue Service showing proposed changes to our taxes for 2004 and 2005. As we have previously reported in our Form 10-Q Report for the quarter ended June 30, 2007, the Internal Revenue Service notified us in May 2007 of a proposed alternative minimum tax liability in the approximate amount of $2.0 million for the 2004 and 2005 tax years. We replied to this report, and on November 5, 2007 received the examiner’s response that contained a new analysis and reduced the proposed adjustment in our tax liability to approximately $1.1 million, including interest.”
Mr. Oldham also said, “As I commented in our July 18, 2007 press release, the Company will vigorously contest the proposed adjustment, and we believe that we will ultimately prevail in our position. The recording of any adjustment, if later determined to be required, would generally not result in a charge to earnings except for amounts which might be assessed for penalties or interest. If determined to be probable, penalties and interest would be charged to earnings which the Company believes would not have a material adverse effect on its financial position or results of operations for any fiscal year, but could have a material adverse effect on results of operations for the fiscal quarter in which the Company might incur or be required to establish a reserve account for penalties or interest.”
Commenting on other matters, Oldham stated, “Effective July 31, 2007, the Company issued $150.0 million of 10.25% Senior Notes due 2014. The proceeds were used to pay off our $50.0 million Second Lien Term Loan facility and to reduce our revolving credit facility. As of September 30, 2007, the borrowing base under our revolving credit facility was $150.0 million, and outstanding borrowings were $89.0 million. We expect the borrowing base to be increased during the fourth quarter of 2007 or the first quarter of 2008.”
Oldham further commented, “As we discussed in our field operations update press release on November 7, 2007 and conference call on November 8, 2007, our 2007 capital investment budget has been revised from $169.8 million to $140.9 million. Although our 2008 capital investment budget has not been finalized, we anticipate that it will be approximately $110 million based on current and anticipated drilling activities, which presently reflect more drilling in the Barnett Shale and Permian Basin and less drilling in the Wolfcamp.”
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 3
In a final comment, Oldham stated, “While our 2007 capital investment budget has decreased and our anticipated 2008 capital investment budget is expected to be less than the 2007 budget, we expect our production volumes to continue to increase in future months. The growth in production volumes is expected to occur as drilling continues and take-away capacity is increased in the Barnett Shale project; infill development drilling continues and waterfloods are implemented in our Carm-Ann and Harris San Andres projects; infill development drilling is commenced in the Diamond M Canyon Reef project; and development drilling continues in our New Mexico Wolfcamp project.”
Field Operations Conference Call and Webcast Replay Information
Parallel’s management hosted a conference call and webcast to discuss field operations on Thursday afternoon, November 8, 2007. A replay of the conference call is available by phone at 888-286-8010 or 617-801-6888, Passcode 56043701, and a replay of the webcast, with audio, is available at the Company’s web site,http://www.plll.com. The supporting slide presentation is also available at the Company’s web site.
SELECTED FINANCIAL STATEMENTS AND SCHEDULES FOLLOW
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 4
PARALLEL PETROLEUM CORPORATION
Consolidated Balance Sheets
(dollars in thousands, except share data)
| | | | | | | | | |
| | | September 30, | | | December 31, | |
| Assets | | 2007 | | | 2006 | |
| | | (unaudited) | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 5,318 | | | $ | 5,910 | |
| | | | | | | | | |
| Accounts receivable: | | | | | | | | |
| Oil and natural gas sales | | | 18,902 | | | | 18,605 | |
| Joint interest owners and other, net of allowance for doubtful account of $50 and $80 | | | 3,507 | | | | 7,209 | |
| Affiliates and joint ventures | | | 3,335 | | | | 3,338 | |
| | | | | | | |
| | | | 25,744 | | | | 29,152 | |
| Other current assets | | | 1,515 | | | | 2,863 | |
| Deferred tax asset | | | 6,514 | | | | 4,340 | |
| | | | | | | |
| Total current assets | | | 39,091 | | | | 42,265 | |
| | | | | | | |
| Property and equipment, at cost: | | | | | | | | |
| Oil and natural gas properties, full cost method (including $72,435 and $50,375 not subject to depletion) | | | 609,216 | | | | 501,405 | |
| Other | | | 2,839 | | | | 2,614 | |
| | | | | | | |
| | | | 612,055 | | | | 504,019 | |
| Less accumulated depreciation, depletion and amortization | | | (137,064 | ) | | | (115,513 | ) |
| | | | | | | |
| Net property and equipment | | | 474,991 | | | | 388,506 | |
| | | | | | | | | |
| Restricted cash | | | 53 | | | | 325 | |
| Investment in pipelines and gathering system ventures | | | 8,621 | | | | 6,454 | |
| Other assets, net of accumulated amortization of $1,386 and $760 | | | 2,820 | | | | 5,268 | |
| | | | | | | |
| | | $ | 525,576 | | | $ | 442,818 | |
| | | | | | | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 42,556 | | | $ | 36,171 | |
| Asset retirement obligations | | | 583 | | | | 701 | |
| Derivative obligations | | | 19,867 | | | | 14,109 | |
| | | | | | | |
| Total current liabilities | | | 63,006 | | | | 50,981 | |
| | | | | | | |
| | | | | | | | | |
| Revolving credit facility | | | 89,000 | | | | 115,000 | |
| Term loan | | | — | | | | 50,000 | |
| Senior notes (principal amount $150,000) | | | 145,300 | | | | — | |
| Asset retirement obligations | | | 4,219 | | | | 4,362 | |
| Derivative obligations | | | 5,471 | | | | 14,386 | |
| Deferred tax liability | | | 28,493 | | | | 24,307 | |
| | | | | | | |
| Total long-term liabilities | | | 272,483 | | | | 208,055 | |
| | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
| Series A preferred stock — par value $0.10 per share, authorized 50,000 shares | | | — | | | | — | |
| Common stock — par value $0.01 per share, authorized 60,000,000 shares, issued and outstanding 38,231,144 and 37,547,010 | | | 382 | | | | 375 | |
| Additional paid-in capital | | | 142,991 | | | | 140,353 | |
| Retained earnings | | | 46,714 | | | | 43,054 | |
| | | | | | | |
| Total stockholders’ equity | | | 190,087 | | | | 183,782 | |
| | | | | | | |
| | | $ | 525,576 | | | $ | 442,818 | |
| | | | | | | |
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 5
PARALLEL PETROLEUM CORPORATION
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Oil and natural gas revenues: | | | | | | | | | | | | | | | | |
| Oil and natural gas sales | | $ | 29,487 | | | $ | 29,490 | | | $ | 79,957 | | | $ | 82,360 | |
| Loss on hedging | | | — | | | | (3,279 | ) | | | — | | | | (9,264 | ) |
| | | | | | | | | | | | | |
| Total revenues | | | 29,487 | | | | 26,211 | | | | 79,957 | | | | 73,096 | |
| | | | | | | | | | | | | | | | | |
| Cost and expenses: | | | | | | | | | | | | | | | | |
| Lease operating expense | | | 6,445 | | | | 5,323 | | | | 16,420 | | | | 12,639 | |
| Production taxes | | | 1,448 | | | | 1,538 | | | | 3,696 | | | | 4,116 | |
| Production tax refund | | | — | | | | — | | | | (1,209 | ) | | | — | |
| General and administrative | | | 2,492 | | | | 2,405 | | | | 7,737 | | | | 7,147 | |
| Depreciation, depletion and amortization | | | 7,821 | | | | 7,420 | | | | 21,680 | | | | 17,848 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total costs and expenses | | | 18,206 | | | | 16,686 | | | | 48,324 | | | | 41,750 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 11,281 | | | | 9,525 | | | | 31,633 | | | | 31,346 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Other income (expense), net: | | | | | | | | | | | | | | | | |
| Gain (loss) on derivatives not classified as hedges | | | (4,556 | ) | | | 10,323 | | | | (11,161 | ) | | | 116 | |
| Gain on ineffective portion of hedges | | | — | | | | 305 | | | | — | | | | 500 | |
| Interest and other income | | | 55 | | | | 29 | | | | 163 | | | | 122 | |
| Interest expense | | | (5,429 | ) | | | (3,345 | ) | | | (13,449 | ) | | | (8,944 | ) |
| Cost of debt retirement | | | (760 | ) | | | — | | | | (760 | ) | | | — | |
| Other expense | | | (76 | ) | | | (96 | ) | | | (91 | ) | | | (164 | ) |
| Equity in loss of pipelines and gathering system ventures | | | (69 | ) | | | (39 | ) | | | (663 | ) | | | (68 | ) |
| | | | | | | | | | | | | |
| Total other income (expense), net | | | (10,835 | ) | | | 7,177 | | | | (25,961 | ) | | | (8,438 | ) |
| | | | | | | | | | | | | |
| Income before income taxes | | | 446 | | | | 16,702 | | | | 5,672 | | | | 22,908 | |
| Income tax expense, deferred | | | (153 | ) | | | (5,706 | ) | | | (2,011 | ) | | | (7,837 | ) |
| | | | | | | | | | | | | |
| Net income | | $ | 293 | | | $ | 10,996 | | | $ | 3,661 | | | $ | 15,071 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.01 | | | $ | 0.30 | | | $ | 0.10 | | | $ | 0.43 | |
| | | | | | | | | | | | | |
| Diluted | | $ | 0.01 | | | $ | 0.30 | | | $ | 0.09 | | | $ | 0.42 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 38,033 | | | | 36,215 | | | | 37,791 | | | | 35,340 | |
| | | | | | | | | | | | | |
| Diluted | | | 38,767 | | | | 36,919 | | | | 38,806 | | | | 36,027 | |
| | | | | | | | | | | | | |
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 6
PARALLEL PETROLEUM CORPORATION
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2007 and 2006
(unaudited)
(dollars in thousands)
| | | | | | | | | |
| | | 2007 | | | 2006 | |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | $ | 3,661 | | | $ | 15,071 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation, depletion and amortization | | | 21,680 | | | | 17,848 | |
| Gain on sale of automobiles | | | (25 | ) | | | — | |
| Accretion of asset retirement obligation | | | 243 | | | | 172 | |
| Accretion of senior notes discount | | | 114 | | | | — | |
| Deferred income tax | | | 2,011 | | | | 7,837 | |
| (Gain) loss on derivatives not classified as hedges | | | 11,161 | | | | (116 | ) |
| Gain on ineffective portion of hedges | | | — | | | | (500 | ) |
| Cost of debt retirement | | | 760 | | | | — | |
| Common stock issued in lieu of cash for directors fees | | | 96 | | | | 100 | |
| Stock option expense | | | 161 | | | | 435 | |
| Equity in loss of pipelines and gathering system ventures | | | 663 | | | | 68 | |
| Bad debt expense | | | (30 | ) | | | — | |
| | | | | | | | | |
| Changes in assets and liabilities: | | | | | | | | |
| Other assets, net | | | 226 | | | | 1,140 | |
| Restricted cash | | | 272 | | | | (50 | ) |
| Decrease (increase) in accounts receivable | | | 3,438 | | | | (12,084 | ) |
| Decrease (increase) in other current assets | | | 713 | | | | (151 | ) |
| Increase in accounts payable and accrued liabilities | | | 6,385 | | | | 14,880 | |
| Federal tax deposit | | | — | | | | (40 | ) |
| | | | | | | |
| Net cash provided by operating activities | | | 51,529 | | | | 44,610 | |
| | | | | | | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Additions to oil and natural gas properties | | | (110,015 | ) | | | (147,058 | ) |
| Use of restricted cash for acquisition of oil and natural gas properties | | | — | | | | 2,366 | |
| Proceeds from disposition of oil and natural gas properties and other property and equipment | | | 1,711 | | | | 130 | |
| Additions to other property and equipment | | | (340 | ) | | | (800 | ) |
| Settlements on derivative instruments | | | (9,875 | ) | | | (3,568 | ) |
| Investment in pipelines and gathering system ventures | | | (2,830 | ) | | | (9,688 | ) |
| | | | | | | |
| Net cash used in investing activities | | | (121,349 | ) | | | (158,618 | ) |
| | | | | | | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Borrowings from bank line of credit | | | 68,500 | | | | 90,000 | |
| Payments on bank line of credit | | | (94,500 | ) | | | (43,000 | ) |
| Payment on term loan | | | (50,000 | ) | | | — | |
| Senior notes (principal amount $150,000) | | | 145,186 | | | | — | |
| Deferred financing cost | | | (2,346 | ) | | | (179 | ) |
| Proceeds (net) from common stock issued | | | — | | | | 60,315 | |
| Proceeds from exercise of stock options | | | 2,388 | | | | 766 | |
| | | | | | | |
| Net cash provided by financing activities | | | 69,228 | | | | 107,902 | |
| | | | | | | |
| | | | | | | | | |
| Net decrease in cash and cash equivalents | | | (592 | ) | | | (6,106 | ) |
| | | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 5,910 | | | | 6,418 | |
| | | | | | | |
| | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 5,318 | | | $ | 312 | |
| | | | | | | |
| | | | | | | | | |
| Non-cash financing and investing activities: | | | | | | | | |
| Oil and natural gas properties asset retirement obligations | | $ | (505 | ) | | $ | 1,957 | |
| Non-cash exchange of oil and natural gas properties | | | | | | | | |
| Properties received in exchange | | $ | 6,463 | | | $ | — | |
| Properties delivered in exchange | | $ | (5,495 | ) | | $ | — | |
| Other transactions: | | | | | | | | |
| Interest paid | | $ | 10,451 | | | $ | 9,065 | |
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 7
PARALLEL PETROLEUM CORPORATION
SELECTED OPERATING AND FINANCIAL DATA
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | 9/30/2007 | | | 9/30/2006 | | | 9/30/2007 | | | 9/30/2006 | |
| | | (in thousands, except per unit data) | | | (in thousands, except per unit data) | |
Production Volumes: | | | | | | | | | | | | | | | | |
| Oil (Bbls) | | | 254 | | | | 282 | | | | 797 | | | | 848 | |
| Natural gas (Mcf) | | | 2,043 | | | | 2,001 | | | | 5,243 | | | | 4,894 | |
BOE(1) | | | 595 | | | | 616 | | | | 1,671 | | | | 1,664 | |
| BOE per day | | | 6.5 | | | | 6.7 | | | | 6.1 | | | | 6.1 | |
| | | | | | | | | | | | | | | | | |
Sales Prices: | | | | | | | | | | | | | | | | |
Oil (per Bbl)(2) | | $ | 69.45 | | | $ | 64.53 | | | $ | 59.98 | | | $ | 61.88 | |
| Natural gas (per Mcf) | | $ | 5.81 | | | $ | 5.64 | | | $ | 6.14 | | | $ | 6.11 | |
BOE price(2) | | $ | 49.62 | | | $ | 47.91 | | | $ | 47.86 | | | $ | 49.50 | |
BOE price(3) | | $ | 49.62 | | | $ | 42.58 | | | $ | 47.86 | | | $ | 43.93 | |
| | | | | | | | | | | | | | | | | |
Operating Revenues: | | | | | | | | | | | | | | | | |
| Oil | | $ | 17,619 | | | $ | 18,194 | | | $ | 47,786 | | | $ | 52,478 | |
| Oil hedge | | | — | | | | (3,279 | ) | | | — | | | | (9,264 | ) |
| Natural gas | | | 11,868 | | | | 11,296 | | | | 32,171 | | | | 29,882 | |
| | | | | | | | | | | | | |
| | | $ | 29,487 | | | $ | 26,211 | | | $ | 79,957 | | | $ | 73,096 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating Expenses and Income: | | | | | | | | | | | | | | | | |
| Lease operating expense | | $ | 6,445 | | | $ | 5,323 | | | $ | 16,420 | | | $ | 12,639 | |
| Production taxes | | | 1,448 | | | | 1,538 | | | | 3,696 | | | | 4,116 | |
| Production tax refund | | | — | | | | — | | | | (1,209 | ) | | | — | |
| General and administrative | | | 2,492 | | | | 2,405 | | | | 7,737 | | | | 7,147 | |
| Depreciation, depletion and amortization | | | 7,821 | | | | 7,420 | | | | 21,680 | | | | 17,848 | |
| | | | | | | | | | | | | |
| | | | 18,206 | | | | 16,686 | | | | 48,324 | | | | 41,750 | |
| | | | | | | | | | | | | |
| Operating income | | | 11,281 | | | | 9,525 | | | | 31,633 | | | | 31,346 | |
| | | | | | | | | | | | | |
| Other income (expense), net | | | | | | | | | | | | | | | | |
| Gain (loss) on derivatives not classified as hedges | | | (4,556 | ) | | | 10,323 | | | | (11,161 | ) | | | 116 | |
| Gain on ineffective portion of hedges | | | — | | | | 305 | | | | — | | | | 500 | |
| Interest and other income | | | 55 | | | | 29 | | | | 163 | | | | 122 | |
| Interest expense | | | (5,429 | ) | | | (3,345 | ) | | | (13,449 | ) | | | (8,944 | ) |
| Cost of debt retirement | | | (760 | ) | | | — | | | | (760 | ) | | | — | |
| Other expense | | | (76 | ) | | | (96 | ) | | | (91 | ) | | | (164 | ) |
| Equity in loss of pipelines and gathering system ventures | | | (69 | ) | | | (39 | ) | | | (663 | ) | | | (68 | ) |
| | | | | | | | | | | | | |
| Total other income (expense), net | | | (10,835 | ) | | | 7,177 | | | | (25,961 | ) | | | (8,438 | ) |
| | | | | | | | | | | | | |
| Income before income taxes | | | 446 | | | | 16,702 | | | | 5,672 | | | | 22,908 | |
| Income tax expense, deferred | | | (153 | ) | | | (5,706 | ) | | | (2,011 | ) | | | (7,837 | ) |
| | | | | | | | | | | | | |
| Net income | | $ | 293 | | | $ | 10,996 | | | $ | 3,661 | | | $ | 15,071 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.01 | | | $ | 0.30 | | | $ | 0.10 | | | $ | 0.43 | |
| Diluted | | $ | 0.01 | | | $ | 0.30 | | | $ | 0.09 | | | $ | 0.42 | |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 38.0 | | | | 36.2 | | | | 37.8 | | | | 35.3 | |
| Diluted | | | 38.8 | | | | 36.9 | | | | 38.8 | | | | 36.0 | |
| | |
| (1) | | A BOE means one barrel of oil equivalent using the ratio of six Mcf of gas to one barrel of oil. |
| |
| (2) | | Excludes hedge transactions. |
| |
| (3) | | Includes hedge transactions. |
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 8
PARALLEL PETROLEUM CORPORATION
DERIVATIVES INFORMATION AS OF SEPTEMBER 30, 2007(1)
OIL COLLARS:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Estimated | |
| | | | | | | NYMEX Oil Prices | | | Fair Market | |
| Period of Time | | Barrels of Oil | | | Floor | | | Cap | | | Value | |
| | | | | | | | | | | | ($ in thousands) | |
| Oct 1, 2007 thru Dec 31, 2007 | | | 73,600 | | | $ | 55.63 | | | $ | 84.88 | | | $ | (108 | ) |
| Jan 1, 2008 thru Dec 31, 2008 | | | 237,900 | | | $ | 60.38 | | | $ | 81.08 | | | | (553 | ) |
| Jan 1, 2009 thru Dec 31, 2009 | | | 620,500 | | | $ | 63.53 | | | $ | 80.21 | | | | (473 | ) |
| Jan 1, 2010 thru Oct 31, 2010 | | | 486,400 | | | $ | 63.44 | | | $ | 78.26 | | | | (80 | ) |
| | | | | | | | | | | | | | | | |
| Total Fair Market Value | | | | | | | | | | | | | | $ | (1,214 | ) |
| | | | | | | | | | | | | | | | |
NATURAL GAS COLLARS:
| | | | | | | | | | | | | | | | | |
| | | | | | | Houston Ship Channel | | | Estimated | |
| | | MMBTU of | | | or WAHA Gas Prices | | | Fair Market | |
| Period of Time | | Natural Gas | | | Floor | | | Cap | | | Value | |
| | | | | | | | | | | | ($ in thousands) | |
| Oct 1, 2007 thru Oct 31, 2007 | | | 31,000 | | | $ | 6.00 | | | $ | 11.05 | | | $ | 0 | |
| Oct 1, 2007 thru Oct 31, 2007 | | | 93,000 | | | $ | 6.25 | | | $ | 8.90 | | | | 75 | |
| Oct 1, 2007 thru Mar 31, 2008 | | | 1,098,000 | | | $ | 6.50 | | | $ | 9.50 | | | | 472 | |
| | | | | | | | | | | | | | | | |
| Total Fair Market Value | | | | | | | | | | | | | | $ | 547 | |
| | | | | | | | | | | | | | | | |
COMMODITY SWAPS:
| | | | | | | | | | | | | |
| | | | | | | | | | | Estimated | |
| | | | | | | NYMEX Oil | | | Fair Market | |
| Period of Time | | Barrels of Oil | | | Swap Price | | | Value | |
| | | | | | | | | ($ in thousands) | |
| Oct 1, 2007 thru Dec 31, 2007 | | | 119,600 | | | $ | 34.36 | | | $ | (5,411 | ) |
| Jan 1, 2008 thru Dec 31, 2008 | | | 439,200 | | | $ | 33.37 | | | | (17,923 | ) |
| | | | | | | | | | | | |
| Total Fair Market Value | | | | | | | | | | $ | (23,334 | ) |
| | | | | | | | | | | | |
INTEREST RATE SWAPS:
| | | | | | | | | | | | | |
| | | | | | | | | | | Estimated | |
| | | Notional | | | Fixed | | | Fair Market | |
| Period of Time | | Amounts | | | Interest Rates | | | Value | |
| | | ($ in millions) | | | | | | | ($ in thousands) | |
| Oct 1, 2007 thru Dec 31, 2007 | | $ | 100 | | | | 4.62 | % | | $ | 161 | |
| Jan 1, 2008 thru Dec 31, 2008 | | $ | 100 | | | | 4.86 | % | | | (323 | ) |
| Jan 1, 2009 thru Dec 31, 2009 | | $ | 50 | | | | 5.06 | % | | | (283 | ) |
| Jan 1, 2010 thru Oct 31, 2010 | | $ | 50 | | | | 5.15 | % | | | (146 | ) |
| | | | | | | | | | | | |
| Total Fair Market Value | | | | | | | | | | $ | (591 | ) |
| | | | | | | | | | | | |
| | |
| (1) | | BNP Paribas and Citibank, N.A. are the counterparties in Parallel’s derivative instruments. |
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Parallel Petroleum Announces
3Q 2007 Financial Results
November 9, 2007
Page 9
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 athttp://www.plll.com.
This release contains forward-looking statements 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 “initial daily test rates,” “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 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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