SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                (Amendment No. 2)

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1996

                         Commission File Number: 1-10695

                       Parker & Parsley Petroleum Company
             (Exact name of registrant as specified in its charter)

                 Delaware                                     74-2570602
      (State or other jurisdiction of                      (I.R.S. Employer
      incorporation or organization)                      Identification No.)

 303 West Wall, Suite 101, Midland, Texas                        79701
 (Address of principal executive offices)                      (Zip Code)

               Registrant's telephone number, including area code:
                                 (915) 683-4768

           Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange
  Title of each class                                      on which registered

  Common Stock.....................................   New York Stock Exchange
  Rights to Acquire Shares of
    Common Stock...................................   New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.     YES    X      NO

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.    [X]

Aggregate market value of the voting stock held by
  non-affiliates of the Registrant as of February 3, 1997......  $1,174,357,828

Number of shares of Common Stock outstanding as of
  February 3, 1997.............................................      35,085,247


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                       PARKER & PARSLEY PETROLEUM COMPANY



                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.


                              PARKER & PARSLEY PETROLEUM COMPANY





Date:    May 9, 1997          By:       /s/ Scott D. Sheffield
                                    -----------------------------------------
                                    Scott D. Sheffield, Chairman of the Board,
                                      President, Chief Executive Officer
                                      and Director (principal executive officer)


Date:    May 9, 1997          By:       /s/ Steven L. Beal
                                    -----------------------------------------
                                    Steven L. Beal, Senior Vice President
                                     and Chief Financial Officer (principal
                                     financial and accounting officer)



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