Parallel Petroleum 8-K Parallel Petroleum Announces Second Quarter 2008 Financial Results

Exhibit 99.1

	PRESS RELEASE
1004 N. Big Spring, Suite 400	Contact:	Cindy Thomason
Midland, TX 79701 (432) 684-3727		Manager of Investor Relations
http://www.plll.com		cindyt@plll.com

PARALLEL PETROLEUM ANNOUNCES
SECOND QUARTER 2008 FINANCIAL RESULTS

MIDLAND, Texas, (BUSINESS WIRE), August 4, 2008— Parallel Petroleum Corporation (NASDAQ: PLLL) today announced its financial results for the second quarter ended June 30, 2008, compared to the results for the same period in 2007. In a separate press release issued today, Parallel announced its production, work-in-progress, revised 2008 capital investment budget, June 30, 2008 reserves, and field operations update. The Company’s financial and field operations conference call and webcast will be held Tuesday, August 5, 2008 at 2:00 p.m. Eastern time (1:00 p.m. Central time). Details for the conference call and webcast are disclosed at the end of this press release.

Second Quarter Financial Results

For the three months ended June 30, 2008, Parallel reported a net loss of $29.2 million, or a loss of $0.70 per diluted share. Included in the net loss was a $71.6 million pre-tax loss on derivatives, which included settlements of $14.6 million. For the three months ended June 30, 2007, Parallel reported net income of $3.5 million, or $0.09 per diluted share. Included in net income for the three months ended June 30, 2007 was a $2.2 million pre-tax loss on derivatives, which included settlements of $3.4 million. Parallel had no derivatives classified as hedges during the second quarters of 2008 or 2007.

For the second quarter of 2008, Parallel’s oil and natural gas sales were 237 MBbls of oil and 2,790 MMcf of natural gas, or 702 MBOE. During this period, the average prices the Company received for its oil and natural gas were $119.42 per barrel and $9.95 per Mcf, or $79.86 per BOE. For the same period of 2007, oil sales were 270 MBbls at an average price of $59.24 per barrel and natural gas sales were 1,679 MMcf at an average price of $6.79 per Mcf, or 550 MBOE at an average price of $49.81 per BOE.

When comparing the second quarter of 2008 to the second quarter of 2007, oil and gas operating revenues increased approximately 105% to $56.1 million, total costs and expenses increased approximately 57% to $24.0 million, and operating income increased approximately 166% to $32.1 million. Total operating costs and expenses increased primarily due to increases in lease operating expense, production taxes, and depreciation, depletion and amortization costs. Interest expense increased approximately 24% to $5.4 million.

Six Months Financial Results

For the six months ended June 30, 2008, Parallel reported a net loss of $31.9 million, or a loss of $0.77 per diluted share. Included in the net loss was a $93.5 million pre-tax loss on derivatives, which included settlements of $22.8 million. For the six months ended June 30, 2007, Parallel reported net income of $3.4 million, or $0.09 per diluted share. Included in net income was a $6.6 million pre-tax loss on derivatives, which included settlements of $5.9 million. Parallel had no derivatives classified as hedges during the six months ended June 30, 2008 or 2007.

For the six months ended June 30, 2008, Parallel’s oil and natural gas sales were 484 MBbls of oil and 5,452 MMcf of natural gas, or 1,393 MBOE. During this period, the average prices the Company received for its oil and natural gas were $106.32 per barrel and $8.90 per Mcf, or $71.80 per BOE. For the same period of 2007, oil sales were 543 MBbls at an average price of $55.56 per barrel and natural gas sales were 3,200 MMcf at an average price of $6.34 per Mcf, or 1,076 MBOE at an average price of $46.89 per BOE.

When comparing the six months ended June 30, 2008 to the six months ended June 30, 2007, oil and gas revenues increased approximately 98% to $100.0 million, total costs and expenses increased approximately 50% to $45.2 million, and operating income increased by approximately 169% to $54.8 million. Total operating costs and expenses increased primarily due to increases in lease operating expense, production taxes, and depreciation, depletion and amortization costs. Interest expense increased approximately 36% to $10.9 million.

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 2

When comparing the six months ended June 30, 2008 to the six months ended June 30, 2007, net cash provided by operating activities increased approximately 104% to $70.9 million, net cash used in investing activities increased approximately 83% to $147.9 million, and net cash provided by financing activities increased approximately 71% to $78.1 million.

Balance Sheet Review

At June 30, 2008, current assets were $66.2 million, which included $8.9 million of cash and cash equivalents. Current liabilities were $127.1 million, including current derivative and put obligations of $63.3 million. Long-term liabilities were $358.1 million, including $282.6 million of debt and $50.9 million of derivative and put obligations. The borrowing base under the Company’s revolving credit facility was $230.0 million as of June 30, 2008, and outstanding borrowings under the revolving credit facility at that same date were $137.0 million. In addition, the Company had $150.0 million outstanding under its senior notes. As of June 30, 2008, the Company’s net capitalized costs associated with its oil and gas properties and other equipment were $620.3 million. Stockholders’ equity was $205.6 million.

Management Comments

Larry C. Oldham, Parallel’s President, commented, “As I have previously stated, our focus in 2008 is to increase production and proved developed producing (PDP) reserves. We have an additional goal to fund our capital investment budget through our net cash provided by operating activities. Due to record production volumes and high commodity prices, for the six months ended June 30, 2008 our net cash provided by operating activities more than doubled to $70.9 million when compared to the same period of 2007. We expect our increased 2008 capital investment budget of $171.6 million to be primarily funded from our net cash provided by operating activities and supplemental borrowings against our revolving credit facility, which had $93.0 million available as of June 30, 2008.”

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 3

PARALLEL PETROLEUM CORPORATION
Consolidated Balance Sheets
($ in thousands)

	June 30,			December 31,
	2008			2007
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	8,910		$	7,816
Accounts receivable:
Oil and natural gas sales		33,334			20,499
Joint interest owners and other, net of allowance for doubtful account of $50		1,905			2,460
Affiliates and joint ventures		6			3,970
		35,245			26,929
Other current assets		548			600
Deferred tax asset		21,461			10,293
Total current assets		66,164			45,638
Property and equipment, at cost:
Oil and natural gas properties, full cost method (including $109,761 and $86,402 not subject to depletion)		782,492			648,576
Other		3,033			2,877
		785,525			651,453
Less accumulated depreciation, depletion and amortization		(165,196	)		(145,482	)
Net property and equipment		620,329			505,971
Restricted cash		80			78
Investment in pipelines and gathering system ventures		328			8,638
Other assets, net of accumulated amortization of $1,711 and $1,425		3,886			2,768
	$	690,787		$	563,093
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	62,917		$	47,848
Asset retirement obligations		877			598
Derivative obligations		62,962			30,424
Put obligations		302			—
Total current liabilities		127,058			78,870
Revolving credit facility		137,000			60,000
Senior notes (principal amount $150,000)		145,630			145,383
Asset retirement obligations		4,729			4,339
Derivative obligations		47,836			13,194
Put obligations		3,029			—
Deferred tax liability		19,916			26,045
Total long-term liabilities		358,140			248,961
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 41,545,114 and 41,252,644		415			412
Additional paid-in capital		198,726			196,457
Retained earnings		6,448			38,393
Total stockholders’ equity		205,589			235,262
	$	690,787		$	563,093

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 4

PARALLEL PETROLEUM CORPORATION
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Oil and natural gas revenues:
Oil and natural gas sales	$	56,075		$	27,354		$	100,016		$	50,470
Cost and expenses:
Lease operating expense		7,254			5,576			14,233			9,975
Production taxes		2,996			1,194			5,285			2,248
Production tax refund		—			(1,209	)		—			(1,209	)
General and administrative		3,265			2,580			5,833			5,245
Depreciation, depletion and amortization		10,483			7,150			19,835			13,859
Total costs and expenses		23,998			15,291			45,186			30,118
Operating income		32,077			12,063			54,830			20,352
Other income (expense), net:
Loss on derivatives not classified as hedges		(71,609	)		(2,170	)		(93,495	)		(6,605	)
Interest and other income		32			56			65			108
Interest expense		(5,368	)		(4,312	)		(10,886	)		(8,020	)
Other expense		(1	)		21			(1	)		(15	)
Equity in gain (loss) of pipelines and gathering system ventures		165			(289	)		382			(594	)
Total other income (expense), net		(76,781	)		(6,694	)		(103,935	)		(15,126	)
Income (loss) before income taxes		(44,704	)		5,369			(49,105	)		5,226
Income tax benefit (expense), deferred		15,499			(1,905	)		17,160			(1,858	)
Net income (loss)	$	(29,205	)	$	3,464		$	(31,945	)	$	3,368
Net income (loss) per common share:
Basic	$	(0.70	)	$	0.09		$	(0.77	)	$	0.09
Diluted	$	(0.70	)	$	0.09		$	(0.77	)	$	0.09
Weighted average common shares outstanding:
Basic		41,446			37,786			41,359			37,667
Diluted		41,446			38,769			41,359			38,763

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 5

PARALLEL PETROLEUM CORPORATION
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2008 and 2007
(unaudited)
($ in thousands)

	2008			2007
Cash flows from operating activities:
Net income (loss)	$	(31,945	)	$	3,368
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		19,835			13,859
Gain on sale of automobiles		(4	)		—
Accretion of asset retirement obligation		187			164
Accretion of senior notes discount		247			—
Deferred income tax (benefit) expense		(17,160	)		1,858
Loss on derivatives not classified as hedges		93,495			6,605
Accretion of interest on put obligations		6			—
Common stock issued to directors		217			—
Stock option expense		227			59
Equity in (gain) loss of pipelines and gathering system ventures		(382	)		594
Bad debt expense		—			(30	)
Changes in assets and liabilities:
Other assets, net		(480	)		(88	)
Restricted cash		(2	)		273
Accounts receivable		(8,316	)		5,889
Other current assets		(99	)		293
Accounts payable and accrued liabilities		15,069			1,831
Net cash provided by operating activities		70,895			34,675
Cash flows from investing activities:
Additions to oil and natural gas properties		(124,727	)		(73,553	)
Proceeds from disposition of oil and natural gas properties		—			1,764
Additions to other property and equipment		(273	)		(214	)
Settlements on derivative instruments		(22,839	)		(5,862	)
Net investment in pipelines and gathering system ventures		(15	)		(2,848	)
Net cash used in investing activities		(147,854	)		(80,713	)
Cash flows from financing activities:
Borrowings from bank line of credit		77,000			46,000
Payments on bank line of credit		—			(1,500	)
Deferred financing cost		(270	)		(175	)
Proceeds from exercise of stock options and warrants		1,323			1,318
Net cash provided by financing activities		78,053			45,643
Net increase (decrease) in cash and cash equivalents		1,094			(395	)
Cash and cash equivalents at beginning of period		7,816			5,910
Cash and cash equivalents at end of period	$	8,910		$	5,515
Non-cash financing and investing activities:
Deferred purchase of derivative puts	$	3,325		$	—
Oil and natural gas properties asset retirement obligations	$	482		$	(385	)
Property transfer:
Transfer to oil and natural gas properties	$	8,707		$	—
Transfer from equity investment	$	(8,707	)	$	—
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	$	9,901		$	8,474

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 6

PARALLEL PETROLEUM CORPORATION
SELECTED OPERATING AND FINANCIAL DATA

	Three Months Ended						Six Months Ended
	6/30/2008			6/30/2007			6/30/2008			6/30/2007
	(in thousands, except per unit data)						(in thousands, except per unit data)
Production Volumes:
Oil (Bbls)		237			270			484			543
Natural gas (Mcf)		2,790			1,679			5,452			3,200
BOE(1)		702			550			1,393			1,076
BOE per day		7.7			6.0			7.7			5.9
Sales Prices:
Oil (per Bbl)	$	119.42		$	59.24		$	106.32		$	55.56
Natural gas (per Mcf)	$	9.95		$	6.79		$	8.90		$	6.34
BOE price	$	79.86		$	49.81		$	71.80		$	46.89
Operating Revenues:
Oil	$	28,322		$	15,956		$	51,491		$	30,167
Natural gas		27,753			11,398			48,525			20,303
	$	56,075		$	27,354		$	100,016		$	50,470
Operating Expenses and Income:
Lease operating expense	$	7,254		$	5,576		$	14,233		$	9,975
Production taxes		2,996			1,194			5,285			2,248
Production tax refund		—			(1,209	)		—			(1,209	)
General and administrative		3,265			2,580			5,833			5,245
Depreciation, depletion and amortization		10,483			7,150			19,835			13,859
		23,998			15,291			45,186			30,118
Operating income		32,077			12,063			54,830			20,352
Other income (expense), net
Loss on derivatives not classified as hedges		(71,609	)		(2,170	)		(93,495	)		(6,605	)
Interest and other income		32			56			65			108
Interest expense		(5,368	)		(4,312	)		(10,886	)		(8,020	)
Other expense		(1	)		21			(1	)		(15	)
Equity in gain (loss) of pipelines and gathering system ventures		165			(289	)		382			(594	)
Total other income (expense), net		(76,781	)		(6,694	)		(103,935	)		(15,126	)
Income (loss) before income taxes		(44,704	)		5,369			(49,105	)		5,226
Income tax benefit (expense), deferred		15,499			(1,905	)		17,160			(1,858	)
Net income (loss)	$	(29,205	)	$	3,464		$	(31,945	)	$	3,368
Net income (loss) per common share:
Basic	$	(0.70	)	$	0.09		$	(0.77	)	$	0.09
Diluted	$	(0.70	)	$	0.09		$	(0.77	)	$	0.09
Weighted average common shares outstanding:
Basic		41.4			37.8			41.4			37.7
Diluted		41.4			38.8			41.4			38.8

⁽¹⁾ A BOE means one barrel of oil equivalent using the ratio of six Mcf of gas to one barrel of oil.

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 7

PARALLEL PETROLEUM CORPORATION
DERIVATIVES INFORMATION AS OF JUNE 30, 2008⁽¹⁾

PUT OPTIONS:

					Estimated
					Fair Market
Period of Time	Barrels of Oil		Floor		Value
					($ in thousands)
Jan 1, 2009 thru Dec 31, 2009		109,500	$	100.00	$	505
Jan 1, 2010 thru Dec 31, 2010		134,100	$	100.00		1,087
Jan 1, 2011 thru Dec 31, 2011		146,000	$	100.00		1,308
Total Fair Market Value					$	2,900

OIL COLLARS:

							Estimated
			NYMEX Oil Prices				Fair Market
Period of Time	Barrels of Oil		Floor		Cap		Value
							($ in thousands)
July 1, 2008 thru Dec 31, 2008		174,800	$	63.42	$	83.86	$	(9,941	)
Jan 1, 2009 thru Dec 31, 2009		620,500	$	63.53	$	80.21		(36,970	)
Jan 1, 2010 thru Oct 31, 2010		486,400	$	63.44	$	78.26		(28,180	)
Total Fair Market Value							$	(75,091	)

NATURAL GAS COLLARS:

							Estimated
	MMBTU of		WAHA Gas Prices				Fair Market
Period of Time	Natural Gas		Floor		Cap		Value
							($ in thousands)
July 1, 2008 thru Dec 31, 2008		1,840,000	$	7.38	$	9.28	$	(5,455	)
Jan 1, 2009 thru Dec 31, 2009		3,285,000	$	7.06	$	9.93		(7,472	)
Total Fair Market Value							$	(12,927	)

COMMODITY SWAPS:

					Estimated
			NYMEX Oil		Fair Market
Period of Time	Barrels of Oil		Swap Price		Value
					($ in thousands)
July 1, 2008 thru Dec 31, 2008		220,800	$	33.37	$	(23,557	)

INTEREST RATE SWAPS:

			Weighted Avg			Estimated
	Notional		Fixed			Fair Market
Period of Time	Amounts		Interest Rates			Value
	($ in millions)					($ in thousands)
July 1, 2008 thru Dec 31, 2008	$	100		4.86	%	$	(997	)
Jan 1, 2009 thru Dec 31, 2009	$	50		5.06	%		(774	)
Jan 1, 2010 thru Oct 31, 2010	$	50		5.15	%		(352	)
Total Fair Market Value						$	(2,123	)

⁽¹⁾ BNP Paribas and Citibank, N.A. are the counterparties in Parallel’s derivative instruments.

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Parallel Petroleum Announces
2Q 2008 Financial Results
August 4, 2008
Page 8

Conference Call and Webcast Information

Parallel’s management will host a conference call to discuss second quarter 2008 financial results, production, work-in-progress, revised 2008 capital investment budget, mid-year reserves, and field operations. In addition to this press release, please refer to Parallel’s Form 10-Q Report for the quarter ended June 30, 2008 that was filed with the Securities and Exchange Commission on August 4, 2008 and its field operations press release dated August 4, 2008.

The conference call will be held on Tuesday, August 5, 2008, at 2:00 p.m. Eastern time (1:00 p.m. Central time). To participate in the call, dial 888-680-0894 or 617-213-4860, Participant Passcode 79648992, at least ten 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 73297729.

Participants may pre-register for the call at Parallel’s web site on the Event Details page for the webcast or atwww.theconferencingservice.com/prereg/key.process?key=PJ8MXKTRG. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

The Company

Parallel Petroleum is an independent energy company headquartered in Midland, Texas, engaged in the exploitation, development, acquisition 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 is available via the internet 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 our internal controls;

• the inherent variability in early production tests;

• uncertainties inherent in estimating production rates;

• the availability and capacity of natural gas gathering and transportation facilities;

• the period of time that our oil and natural gas wells have been producing;

• 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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