1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
Amendment No. 1
----------------------------
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1999 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition period from to
--------------------------
COMMISSION FILE NUMBER 0-13305
--------------------------
PARALLEL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-1971716
(State of other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Marienfeld Place, Suite 465,
Midland, Texas 79701
(Address of principal executive offices) (Zip Code)
(915) 684-3727
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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
At August 1, 1999, there were 18,331,858 shares of the Registrant?s Common
Stock, $0.01 par value, outstanding.
================================================================================
2
INDEX
PART I. - FINANCIAL INFORMATION Page No.
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to the succeeding pages for the following
financial statements:
- Consolidated Balance Sheet as of December 31, 1998 and
June 30, 1999 (unaudited) 4
- Unaudited Consolidated Statements of Operations for the
three months ended June 30, 1998 and 1999 and six months
ended June 30, 1998 and 1999 6
- Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1999 7
- Notes to Consolidated Financial Statements 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12
3
EXPLANATORY NOTE
This amendment reflects the unaudited pro forma results of operations that
include Parallel?s acquired interest in First Permian, LLC, as described in Note
2. The pro forma results for the six months ended June 30, 1999 and 1998 give
effect to the acquisition as if it had occurred at the beginning of fiscal 1998.
4
PARALLEL PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, June 30, 1999
ASSETS 1998* (Unaudited)
- ------------- ------------ --------------
Current assets:
Cash and cash equivalents $ 1,178,819 $ 1,218,599
Accounts receivable:
Oil and gas 1,432,659 1,366,385
Others, net of allowance for doubtful accounts
of $71,358 in 1998 and 1999 247,740 405,776
Affiliate 11,844 --
------------ ------------
1,692,243 1,772,161
Other assets 61,504 28,012
------------ ------------
Total current assets 2,932,566 3,018,772
------------ ------------
Property and equipment, at cost:
Oil and gas properties, full cost method 65,565,466 87,117,125
Other 287,586 286,088
------------ ------------
65,853,052 87,403,213
Less accumulated depreciation and depletion 22,279,355 24,140,149
------------ ------------
Net property and equipment 43,573,697 63,263,064
------------ ------------
Other assets, net of accumulated amortization of
$86,917 in 1998 and $95,248 in 1999 58,519 278,664
------------ ------------
$ 46,564,782 $ 66,560,500
============ ============
5
PARALLEL PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Continued)
December 31, June 30, 1999
LIABILITIES AND STOCKHOLDERS? EQUITY 1998* (Unaudited)
- ------------------------------------ ------------ --------------
Current liabilities:
Accounts payable and accrued liabilities:
Current portion of affiliate?s long-term
debt (Note 3) $ -- $ 506,250
Subordinated notes payable (Note 4) -- 3,600,000
Trade 2,803,539 2,142,738
Affiliate 214 6,423
Preferred stock dividend -- 24,362
------------ ------------
Total current liabilities 2,803,753 6,279,773
------------ ------------
Long-term debt:
Bank credit facility (Note 3) 18,035,889 18,815,889
Proportionate share of affiliate's long-
term debt, net of current portion(Note 3) -- 16,143,750
------------ ------------
Total long-term debt 18,035,889 34,959,639
Deferred income taxes -- --
Stockholders' equity:
Preferred stock ? 6% convertible preferred stock -
par value $.10 per share(aggregate liquidation
preference of $10) authorized 10,000,000 shares,
issued and outstanding 974,500 in 1998 and 1999 97,450 97,450
Common stock - par value $.01 per share, authorized
60,000,000 shares, issued and outstanding
18,306,858 in 1998 and 18,331,858 in 1999 183,069 183,319
Additional paid-in surplus 32,341,971 32,042,197
Retained deficit (6,897,350) (7,001,878)
------------ ------------
Total stockholders' equity 25,725,140 25,321,088
Contingencies
------------ ------------
$ 46,564,782 $ 66,560,500
============ ============
*The balance sheet as of December 31, 1998 has been derived from Parallel's
audited financial statements. The accompanying notes are an integral part of
these financial statements.
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PARALLEL PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
1998 1999 1998 1999
---------- --------- ---------- ----------
Oil and gas revenues $2,453,140 $1,991,727 $4,565,703 $3,954,816
---------- ---------- ---------- ----------
Cost and expenses:
Lease operating expense 613,053 551,142 1,170,691 1,064,964
General and administrative 199,117 220,911 419,505 424,148
Depreciation, depletion
and amortization 1,063,466 956,958 1,994,283 1,860,794
---------- ---------- ---------- ----------
1,875,636 1,729,011 3,584,479 3,349,906
---------- ---------- ---------- ----------
Operating income 577,504 262,716 981,224 604,910
---------- ---------- ---------- ----------
Other income (expense), net:
Interest income 395 13,695 470 26,971
Other income 37,552 6,606 51,111 13,229
Interest expense (341,817) (376,057) (646,095) (747,128)
Other expense (4,195) (1,204) (8,577) (2,509)
---------- ---------- ---------- ----------
Total other expense, net (308,065) (356,960) (603,091) (709,437)
---------- ---------- ---------- ----------
Income (loss) before income taxes 269,439 (94,244) 378,133 (104,527)
Income tax expense -deferred 88,826 -- 124,695 --
---------- ---------- ---------- ----------
Net income (loss) $ 180,613 $ (94,244) $ 253,438 $ (104,527)
========== ========= ========== ==========
Cumulative preferred stock dividend $ 68,000 $ 146,175 $ 68,000 $ 316,713
========== ========= ========== ==========
Net income (loss) available
to common stockholders $ 112,613 $(240,419) $ 185,438 $ (421,240)
========== ========= ========== ==========
Net income (loss) per common share
Basic $ .006 $ (.013) $ .010 $ (.023)
========== ========= ========== ==========
Diluted $ .006 $ (.013) $ .010 $ (.023)
========== ========= ========== ==========
Weighted average common shares
Outstanding - diluted 18,123,822 18,331,858 18,121,533 18,120,194
========== ========= ========== ==========
The accompanying notes are an integral part of these financial statements.
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PARALLEL PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
---------------------------
1998 1999
---------- ----------
Cash flows from operating activities:
Net income (loss) $ 253,438 $ (104,527)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation, depletion and amortization 1,994,283 1,860,794
Incomes taxes 124,695 --
Other, net (5,702) (220,145)
Changes in assets and liabilities:
Decrease in trade receivables (53,602) (79,918)
(Increase) decrease in prepaid expenses
and other (73,701) 33,492
Decrease in accounts payable
and accrued liabilities (1,419,721) (630,230)
Increase in current portion of affiliate
long-term debt -- 506,250
Increase in subordinated notes payable -- 3,600,000
----------- -----------
Net cash provided by operating
activities 819,690 4,965,716
----------- -----------
Cash flows from investing activities:
Additions to property and equipment (12,953,814) (21,805,401)
Proceeds from disposition of property and equipment -- 255,240
----------- -----------
Net cash used in investing
activities (12,953,814) (21,550,161)
----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of long-term debt 13,343,000 16,923,750
Payment of long-term debt (7,234,000) --
Proceeds from exercise of options and warrants 53,438 17,188
Stock offering costs (80,851) --
Proceeds from preferred stock issuance 6,000,000 --
Payment of preferred stock dividend (68,000) (316,713)
----------- -----------
Net cash provided by financing
activities 12,013,587 16,624,225
----------- -----------
Net increase (decrease) in cash
and cash equivalents (120,537) 39,780
Beginning cash and cash equivalents 597,149 1,178,819
----------- -----------
Ending cash and cash equivalents $ 476,612 $ 1,218,599
=========== ===========
Non-cash financing activities:
Accrued preferred stock dividend $ -- $ 24,362
=========== ===========
The accompanying notes are an integral part of these financials.
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PARALLEL PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Parallel and, with respect to our consolidated balance sheet as of June 30,
1999, our pro rata share of the assets and liabilities associated with our 22.5%
membership interest in First Permian, LLC. First Permian is a Delaware limited
liability company formed on June 25, 1999 for the purpose of acquiring a wholly
owned, indirect subsidiary of Fina Oil and Chemical Company. See Note 2 to
Consolidated Financial Statements.
There is no reportable income or expense associated with our interest in
First Permian for the current reporting period. In subsequent reporting periods,
our statements of operations and cash flows will be consolidated to reflect our
pro rata share of the income and expenses of First Permian.
The financial information included herein, with the exception of the
balance sheet as of December 31, 1998, is unaudited. However, such information
includes all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair statement of the
results of operations for the interim periods. The results of operations for the
interim period are not necessarily indicative of the results to be expected for
an entire year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q Report pursuant to certain
rules and regulations of the Securities and Exchange Commission. These financial
statements should be read in conjunction with the financial statements and notes
included in Parallel's 1998 Annual Report and 1998 Form 10-K.
NOTE 2. RECENT EVENTS
On June 30, 1999, First Permian and a wholly owned, indirect subsidiary of
Fina Oil and Chemical Company consummated a cash merger. First Permian was the
surviving entity. The transaction was accounted for as a purchase. The assets
acquired consisted primarily of producing oil and gas properties located in the
Permian Basin of west Texas. After giving effect to purchase price adjustments,
First Permian paid to Fina cash in the aggregate amount of approximately $92.0
million. Our proportionate share of the book value of the assets acquired
through the cash merger is approximately $20.0 million and is reflected in the
June 30, 1999 consolidated balance sheet.
First Permian is owned by Parallel, Baytech, Inc., Tejon Exploration
Company and Mansefeldt Investment Corporation. Baytech, Tejon and Mansefeldt are
privately held oil and gas companies. Parallel and Baytech are the managers of
First Permian and each owns a 22.5% membership interest. Tejon Exploration and
Mansefeldt Investment each own a 27.5% interest in First Permian. If certain
conditions are met regarding the prepayment of $16.0 million aggregate principal
amount of subordinated unsecured notes made by First Permian and payable to
Tejon and Mansefeldt, the proceeds of which were used to help finance the
acquisition, Parallel?s interest in First Permian could increase to 37.5% for a
nominal fee per membership unit.
The purchase was financed, in part, with the proceeds of the revolving
credit facility provided by Bank One, Texas, N.A. to First Permian. On June 30,
1999, Parallel and Baytech entered into a credit agreement with Bank One, Texas,
N.A. that established the $110.0 million revolving credit facility. The
principal amount of the initial loan from Bank One is $74.0 million. Parallel?s
obligation is limited to a guaranty of $10.0 million of the bank borrowings. See
Note 3 to Consolidated Financial Statements for further discussion of the credit
facility.
Additional financing for the cash merger was obtained through subordinated
debt borrowings, which included $8.0 million borrowed from Tejon Exploration
Company and $8.0 million borrowed from Mansefeldt Investment. The terms of the
subordinated debt and the effect on Parallel?s balance sheet are discussed in
Note 4 to Consolidated Financial statements.
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The following unaudited pro forma results of operations for the six months
ended June 30, 1999 and 1998 give effect to the acquisition as if it had
occurred at the beginning of fiscal 1998.
Six Months Ended June 30,
----------------------------
1999 1998
---- ----
Oil and gas revenues $ 6,247,719 $ 7,071,171
Income (loss) before income taxes (727,976) 46,778
Net income (loss) (480,465) 30,873
Net loss available to common shareholders (797,176) (37,127)
Net loss per common share
Basic $ (.044) $ (.002)
Diluted $ (.044) $ (.002)
NOTE 3. LONG TERM DEBT
Our long term debt at June 30, 1999 consisted of the following:
Revolving credit facility note payable to bank at
the bank's base lending rate plus .25%
(8.0% at June 30, 1999) $18,815,889
Affiliate debt: Parallel's proportionate share
(22.5%) of the First Permian, LLC
revolving credit facility note payable
to bank at bank?s base lending rate
plus 1.5% (9.25% at June 30, 1999) 16,650,000
-----------
$35,465,889
Less: Parallel?s proportionate share of
current maturities of affiliate debt 506,250
-----------
Total long term debt $34,959,639
===========
Scheduled maturities of Parallel's debt and
our proportionate share of affiliate's
debt at June 30, 1999 are as follows:
2000 $ 506,250
2001 19,490,889
2002 15,468,750
-----------
$35,465,889
===========
Revolving Credit Facility. At June 30, 1999, Parallel was a party to a loan
agreement with Bank One, Texas, N.A. Under terms of the loan agreement, we may
borrow up to the lesser of $30,000,000 or the ?borrowing base? then in effect.
The borrowing base in effect at June 30, 1999 was $18,815,889 (the Revolving
Facility). The borrowing base was subject to reduction by a monthly commitment
reduction of $380,000. However, effective March 23, 1999, the monthly commitment
reduction was suspended by the bank until May 1, 1999 at which time the
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borrowing base and monthly commitment reduction were scheduled for
redetermination. The loan agreement provides for a redetermination of the
borrowing base and monthly commitment reduction every six months on April 1 and
October 1 of each year or at such other times as the bank elects. As of the date
of this Form 10-Q Report, we had not received notice from the bank of the
redetermined borrowing base or monthly reduction amount. At June 30, 1999, we
had borrowed all the funds currently available under the Revolving Facility. All
indebtedness under the Revolving Facility matures July 1, 2001. The loan is
secured by substantially all of our oil and gas properties. Commitment fees of
.25% per annum on the difference between the commitment and the average daily
amount outstanding are due quarterly.
The unpaid principal balance of the Revolving Facility bears interest at
our election at a rate equal to (i) the bank?s base lending rate plus .25% or
(ii) the bank's Eurodollar rate plus a margin of 2.5%. Interest under the
Revolving Facility is due and payable monthly. At June 30, 1999, the interest
rate was the bank?s base rate plus .25% or 8.0%.
The loan agreement contains various restrictive covenants and compliance
requirements, which include (1) maintenance of certain financial ratios, (2)
limiting the incurrence of additional indebtedness, (3) prohibiting payment of
dividends on common stock, and (4) prohibiting the payment of dividends on
preferred stock when an event of default under the loan agreement is in
existence.
At June 30, 1999 we were in default under our loan agreement for events of
noncompliance with certain covenants of the loan agreement. We have obtained a
waiver of the default from our bank lender.
Long Term Debt of Affiliate. On June 30, 1999, Parallel, Baytech and First
Permian entered into a credit agreement with Bank One, Texas, N.A. that
established a $110.0 million revolving credit facility to finance, in part, the
merger of a wholly owned, indirect subsidiary of Fina Oil and Chemical Company
into First Permian. The principal amount of the initial loan from Bank One was
$74.0 million. Under terms of the credit agreement, dated June 30, 1999, as of
August 12, 1999, the principal amount outstanding under the revolving credit
facility bears interest, at First Permian?s election, at Bank One?s base rate
plus 1.50% or the Eurodollar rate plus 4.50% until such time that subordinated
debt in the principal amount of $16.0 million has been paid in full. See Note 4
to Consolidated Financial Statements. When these subordinated unsecured loans
have been paid in full, the revolving credit facility will bear interest at Bank
One?s base rate or the Eurodollar rate plus 2.50%.
The credit facility provides for revolving loans subject to a borrowing
base and a monthly commitment reduction. The initial borrowing base is $74.0
million and the initial monthly commitment reduction amount is $250,000. The
monthly commitment reduction commences on October 1, 1999 and continues with a
like reduction on the first day of each following month. The borrowing base and
the monthly commitment reduction amount may be redetermined by the bank on
January 1 and July 1 of each year or at other times requested by First Permian.
All outstanding principal under the revolving credit facility is due and payable
on July 1, 2002. Interest is payable on the last day of each month. The loan is
secured by substantially all of the oil and gas properties First Permian
acquired from Fina Oil and Chemical Company. Parallel and Baytech each
guaranteed $10.0 million of the loans from Bank One. Our proportionate share of
First Permian?s long term debt is $16,650,000.
NOTE 4. AFFILIATE SUBORDINATED UNSECURED LOANS
In addition to the $74.0 million loan from Bank One, First Permian borrowed
$8.0 million from Tejon Exploration Company and $8.0 million from Mansefeldt
Investment Corporation to help finance the acquisition of oil and gas properties
from Fina Oil and Chemical Company. Under terms of an Intercreditor Agreement,
dated June 30, 1999, the loans made by Tejon and Mansefeldt are unsecured and
subordinate in all respects to the senior loans made by Bank One.
Each loan requires a principal payment of $2.5 million on December 31, 1999
and $5.5 million on June 30, 2000. Principal payments on the subordinated loans
are subject to certain restrictions. Our proportionate share of the subordinated
debt is $3.6 million and is reflected on our June 30, 1999 balance sheet as
subordinated notes payable.
NOTE 5. PREFERRED STOCK
We have outstanding 974,500 shares of 6% Convertible Preferred Stock, $0.10
par value per share. Cumulative annual dividends of $0.60 per share are payable
semi-annually on June 15 and December 15 of each year. Each share of Preferred
Stock may be converted, at the option of the holder, into 2.8571 shares of
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common stock at an initial conversion price of $3.50 per share, subject to
adjustment in certain events. The preferred stock has a liquidation preference
of $10 per share and has no voting rights, except as required by law. We may
redeem the preferred stock, in whole or part, after October 20, 1999, for $10
per share plus accrued and unpaid dividends.
NOTE 6: FULL COST CEILING TEST
We use the full cost method to account for our oil and gas producing
activities. Under the full cost method of accounting, the net book value of oil
and gas properties, less related deferred income taxes, may not exceed a
calculated ?ceiling.? The ceiling limitation is the discounted estimated
after-tax future net revenues from proved oil and gas properties. In calculating
future net revenues, current prices and costs are generally held constant
indefinitely. The net book value, less relate deferred income taxes, is compared
to the ceiling on a quarterly and annual basis. Any excess of the net book
value, less related deferred income taxes, is generally written off as an
expense. Under rules and regulations of the SEC, the excess above the ceiling is
not written off if, subsequent to the end of the quarter or year but prior to
the release of the financial results, prices increased sufficiently such that an
excess above the ceiling would not have existed if the increased prices were
used in the calculations.
During the fourth quarter of 1998, we recognized a non-cash impairment
charge of $15.0 million, or $12.0 million net of tax, related to our oil and gas
reserves and unproved properties. The impairment of oil and gas assets was
primarily the result of the effect of significantly lower oil and natural gas
prices on both proved and unproved oil and gas properties. At June 30, 1999, our
net book value of oil and gas, less related deferred income taxes, was below the
calculated ceiling. As a result, we were not required to record a reduction of
our oil and gas properties under the full cost method of accounting.
NOTE 7. NET INCOME PER COMMON SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share is computed similarly to the previously
reported fully diluted earnings per share and reflects the assumed conversion of
all potentially dilutive securities.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1998 1999 1998 1999
------------ ----------- ----------- -----------
Basic EPS Computation:
Numerator -
Net income (loss) $ 180,613 $ (94,244) $ 253,438 (104,527)
Preferred stock dividend (68,000) (146,175) (68,000) 316,713)
---------- ---------- ---------- ----------
Net income (loss) available to
common stockholders 112,613 (240,419) 185,438 (421,240)
=========== ========== ========== ==========
Denominator -
Weighted average common
shares outstanding 18,123,822 18,331,858 18,121,533 18,120,194
----------- ----------- ---------- ----------
Basic earnings (loss) per share $.006 $ (.013) $ .010 $(.023)
=========== ========== ========== ==========
Diluted EPS Computation
Numerator -
Net income (loss) $ 180,613 $ (94,244) $ 253,438 $ (104,527)
Preferred stock dividends (68,000) (146,175) (68,000) (316,713)
---------- ---------- ---------- ----------
Net income (loss) available to
common stockholders 112,613 (240,419) 185,438 (421,240)
=========== ========== ========== ==========
Denominator -
Weighted average
common shares outstanding 18,123,822 18,331,858 18,121,533 18,120,194
Diluted earnings (loss) per share $ .006 $ (.013) $ (.010) $(.023)
========== ========== ========== ==========
Employee stock options to purchase shares of common stock and convertible
preferred stock were outstanding during the six-month period ended June 30, 1999
12
but were not included in the computation of diluted net loss per share because
either (i) the employee stock options? exercise price was greater than the
average market price of the common stock of Parallel, (ii) the effect of the
assumed conversion of Parallel's preferred stock to common stock would be
antidilutive, or (iii) Parallel had net loss from continuing operations and,
therefore, the effect would be antidilutive.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our major market risk exposure is in the pricing applicable to our oil and
natural gas production. Realized pricing is primarily driven by the prevailing
domestic price for crude oil and spot prices applicable to the region in which
we produce natural gas. Historically, prices received for oil and gas production
have been volatile and unpredictable.
Effective July 1, 1999, a portion of the future crude oil production
associated with our membership interest in First Permian was hedged against
price risks through the use of swap contracts. Settlements of gains and losses
on price swap contracts are realized monthly, generally based upon the
difference between the contract price and the average closing NYMEX price and
are reported as a component of oil and gas revenues and operating cash flows in
the period realized. There were no gains or losses at June 30, 1999.
While the use of these price risk management arrangements limits the
downside risk of adverse price movements, it may also limit future revenues from
favorable price movements. These hedging activities will be conducted with major
financial or commodities trading institutions that management believes entail
acceptable levels of market and credit risks.
The following table sets forth our pro rata share of First Permian's
outstanding oil hedge contracts, which were effective at July 1, 1999. At June
30, 1999, we did not have any hedging contracts in place.
Type Volume/Month Term Price Commodity
- ---- ------------ ---- ----- ---------
Swap 22,500 barrels 7/1/99 - 12/31/99 $19.02 WTI NYMEX
Swap 21,600 barrels 1/1/00 - 12/31/00 $18.07 WTI NYMEX
Swap 20,475 barrels 1/1/01 - 6/30/01 $17.70 WTI NYMEX
Commodity Swap 11,250 barrels 8/1/99 - 12/31/99 $1.28 Differential between
Platts WTI /Platts WTS
Commodity Swap 11,250 barrels 8/1/99 - 12/31/99 $1.24 Differential between
Platts WTI /Platts WTS
Our only financial instrument sensitive to changes in interest rates is
bank debt. Our annual interest costs in 1999 will fluctuate based on short-term
interest rates. As the interest rate is variable and reflects current market
conditions, the carrying value approximates the fair value. The following table
shows principal cash flows and related weighted average interest rates by
expected maturity dates. Weighted average interest rates for the secured
revolving facility were determined using weighted average interest paid and
accrued in December 1998. Weighted average interest rates for the non-recourse
affiliate debt were determined using the interest rate in effect on June 30,
1999, the date of the Fina property acquisition.
Value 1999 2000 2001 2002 Total Fair Value
- --------------------------------------------------------------------------------------------------------
(in 000's, except interest rates)
Variable rate debt
Revolving facility (secured) - - $18,816 - $18,816 $18,816
Average interest rate 7.50% 7.50% 7.50%
$506 $675 $15,469 $16,650 $16,650
Affiliate debt
Average interest rate 9.25% 9.25% 9.25%
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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, thereunto duly authorized.
PARALLEL PETROLEUM CORPORATION
BY: /s/ THOMAS R. CAMBRIDGE
Date: January 19, 2000 ------------------------------------
Thomas R. Cambridge
Chairman of the Board of Directors
and Chief Executive Officer
Date: January 19, 2000 BY: /s/ LARRY C. OLDHAM
------------------------------------
Larry C. Oldham,
President (Principal Financial Officer)