Exhibit 99.1
PRESS RELEASE
Parallel Petroleum Corporation
1004 N. Big Spring, Suite 400 Contact: Cindy Thomason
Midland, TX 79701 (915) 684-3727 Manager of Investor Relations
http://www.parallel-petro.com cindyt@parallel-petro.com
PARALLEL PETROLEUM ANNOUNCES YEAR END 2002
NET INCOME OF $18.1 MILLION OR $.79 PER DILUTED SHARE
MIDLAND, Texas, (BUSINESS WIRE), March 26, 2003 - Parallel Petroleum Corporation
(NASDAQ: PLLL) today announced financial results for the year and fourth quarter
ended December 31, 2002.
Year End Results
For the twelve months ended December 31, 2002, Parallel reported net income of
$18,116,748 or $.79 per diluted share. Included in net income is $856,110 of
operating income and a realized gain of $31,044,452 from the sale of all the oil
and gas properties of First Permian, LP less incentive awards paid on the
realized gain of $1,38l,771. Net income was decreased by $1,665,329 of items not
currently requiring cash comprised of a $717,034 loss on sale of marketable
securities and a $948,295 change in the fair value of derivatives associated
with the Company's oil and gas hedges. For the same period in 2001, Parallel
recorded a net loss of $5,292,275, or $.26 per diluted share, which included a
noncash impairment charge of $16,819,813 relating to oil and gas properties,
which was partially offset by a recognized gain attributable to its share of
First Permian, LP of $840,529.
Net cash provided by operating activities for the twelve month period ended
December 31, 2002 was $1,526,897, compared to $13,382,953 for the same period in
2001. Net cash provided by operating activities in 2002 does not include the
total cash proceeds from the sale of the Company's investment in First Permian,
LP in the amount of $30,801,183. The decrease in net cash provided by operations
in 2002 was primarily related to declines in oil and gas volumes and prices, an
increase in current assets over current liabilities, and an increase in staffing
needs associated with the Company's new business plan.
Twelve month oil sales were 130,810 Bbls at an average price of $24.59/Bbl.
Natural gas sales were 2,669,983 Mcf at an average price of $3.33/Mcf. On an
equivalent barrel of oil basis, sales were 575,807 EBO at an average price of
$21.03/EBO. For the same period of 2001, oil sales were 138,243 Bbls at an
average price of $24.80/Bbl. Natural gas sales were 3,266,350 Mcf at an average
price of $4.41/Mcf. On an equivalent barrel of oil basis, sales were 682,635 EBO
at $26.13/EBO.
Fourth Quarter Results
For the three months ended December 31, 2002, Parallel reported net income of
$60,437. Included in net income is operating income of $586,527, a realized gain
of $378,632 related to the wind down of First Permian, LP and a $211,506 gain on
sale of marketable securities offset by a $490,874 change in the fair value of
derivatives associated with the company's oil and gas hedges. For the same
period last year, Parallel reported a net loss of $10,212,521. The 2001 loss
included a $14,642,685 non cash impairment charge as a result of the Company's
full cost pool (net property costs) exceeding the estimated discounted present
value of proved reserves using oil and gas prices as of December 31, 2001. This
charge was partially offset by a $398,497 gain attributable to Parallel's share
of First Permian, LP's earnings.
Fourth quarter oil sales were 39,071 Bbls at an average price of $26.66/Bbl.
Natural gas sales were 853,074 Mcf at an average price of $4.19/Mcf. On an
equivalent barrel of oil basis, sales were 181,250 EBO at an average price of
$25.47/EBO. For the same quarter of last year, oil sales were 28,021 Bbls at an
average price of $19.86/Bbl. Natural gas sales were 589,263 Mcf at an average
price of $2.37/Mcf. On an equivalent barrel of oil basis, sales were 126,232 EBO
at an average price of $15.44/EBO.
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Parallel Petroleum Announces 4Q Year End 2002 Results
March 26, 2003
Page 2
Balance Sheet Review
As of December 31, 2002, current assets were $16,054,695, which included
$11,811,704 of cash. Current liabilities were $7,515,312, resulting in a net
working capital of $8,539,383. Long-term debt, including current maturities,
stood at $49,750,000 under Parallel's loan facility, which fully utilized the
Company's borrowing base. During 2002, Parallel reduced long-term debt by
$15,685,589 with proceeds from the sale of Energen stock offset by an increase
in long-term debt of $53,435,589 associated with the Company's acquisition,
development and exploration activities. The Company's net capitalized costs
associated with its oil and gas properties were $85,065,856, which included
approximately $1,892,923 of leasehold and seismic costs for undeveloped
prospects. Parallel's stockholders' equity as of December 31, 2002 was
$45,500,144.
Capital Investments for the Year Ended December 31, 2002
Parallel also reported that 2002 net capital expenditures totaled approximately
$60 million compared to $11.5 million in 2001. Of the $60 million, approximately
$48 million was due to the Company's acquisition of producing properties in the
Permian Basin of West Texas. The Company also spent approximately $12 million
for its exploration and development activities related to its Cook Mountain Gas
Project of East Texas and its Yegua/Frio Gas Project located onshore the Gulf
Coast of South Texas.
For the year ended December 31, 2002, Parallel participated in the drilling of
19 gross wells (6.09 net wells), of which 16 gross wells (5.40 net wells) are
productive. This compares with 31 gross wells (7.51 net wells) in 2001, of which
18 gross wells (4.10 net wells) were productive.
Proved Reserves for the Year Ended December 31, 2002
The following table presents Parallel's proved reserve data as of December 31,
2002 and 2001.
<table>
Parallel Petroleum Corporation
Proved Reserves
as of as of
December 31, December 31,
2002 (1) 2001 (2) Change
--------------------------------------------------
<s> <c> <c> <c>
Oil - MBbls 10.3 0.9 1044%
Gas - MMcf 15.6 13.9 12%
MBOE 12.9 3.2 303%
BCFE 77.0 19.0 305%
Average price:
Bbl $29.21 $18.98 54%
Mcf $4.40 $2.72 62%
Pretax PV-10 (millions) $123 $17 623%
</table>
(1) Based on independent reserve studies prepared by Williamson Petroleum
Consultants and Cawley, Gillespie & Associates.
(2) Based on independent reserve studies prepared by Williamson Petroleum
Consultants.
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Parallel Petroleum Announces 4Q Year End 2002 Results
March 26, 2003
Page 3
Capital Investment Budget for 2003
Parallel's revised estimated capital investment budget for 2003 totals
approximately $12 million, net to its interest, which represents a $4 million
increase in its original budget of $8 million (see news release dated January
17, 2003). Of this increase, $3 million is related to the Company's Diamond M
project (see news release dated March 25, 2003) and $1 million has been budgeted
for leasehold acquisitions. The budget will be funded from the Company's 2003
estimated operating cash flow, which is based on anticipated commodity prices
and forecasted production volumes. The amount and timing of expenditures are
subject to change based upon market conditions, results of expenditures, new
opportunities and other factors.
Management Comments
Larry C. Oldham, Parallel's President, commented, "Financially, the Company's
long-term debt has been reduced by approximately $7 million since year-end and
based on anticipated production volumes and oil and gas prices, we expect 2003
net cash provided by operating activities to be in the $16 million range.
Parallel's $12 million capital investment budget for fiscal 2003 will require
approximately 75% of our anticipated net cash provided by operating activities,
which will allow us to build cash and to continue to pursue additional strategic
acquisitions during 2003."
Conference Call Information
Parallel's management will host a conference call to discuss the Company's
financial and operational results for the fourth quarter and year ended December
31, 2002 on Thursday, March 27, 2003 at 10:00 a.m. Central time. To participate
in the call, dial 1-973-317-5319 at least five minutes before the scheduled
start time. The conference call will also be webcast, complete with the "Current
Slide Presentation", and can be accessed live at Parallel's web site,
www.parallel-petro.com. A replay of the conference call will be available at the
Company's web site or by calling 1-973-709-2089, Passcode I.D. 287626.
Upcoming Presentations
Parallel's management will continue to host presentations discussing the
Company's "Comprehensive Growth Plan" in various cities throughout the country
in the coming months. Meetings are scheduled during the months of April and May
in New Orleans, New York and Boston. In New Orleans, on Tuesday, April 1,
Parallel will host a breakfast meeting at 7:00 a.m. Central Time at the 31st
Annual Howard Weil Energy Conference at the Sheraton New Orleans Hotel, 500
Canal Street. In New York, in conjunction with the IPAA Oil & Gas Investment
Symposium, Parallel will host an analyst dinner and will present at the
Symposium. The dinner will be at the `21' Club, 21 West 52nd Street, on Monday,
April 28, at 7:00 p.m. Parallel's IPAA presentation is scheduled on Wednesday,
April 30, at 9:15 a.m. Eastern Time at the Sheraton New York Hotel and Towers,
811 Seventh Avenue at 52nd Street. In Boston, on Thursday, May 1, Parallel will
host a luncheon presentation at noon Eastern Time at the Le Meridien Hotel, 250
Franklin Street.
Parallel's presentation at the IPAA Oil & Gas Investment Symposium in New York
will be webcast, complete with slide show. The webcast can be accessed live on
April 30th at 9:15 a.m. Eastern Time at Parallel's web site,
www.parallel-petro.com, or at http://www.vcall.com/ClientPage.asp?ID=83462.
More information pertaining to these and future meetings can be found at the
Company's web site, www.parallel-petro.com. If you would like to attend one of
the meetings, please RSVP through the web site or by contacting Cindy Thomason,
Parallel's Manager of Investor Relations, at cindyt@parallel-petro.com.
FINANCIAL STATEMENTS AND SCHEDULES FOLLOW
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Parallel Petroleum Announces 4Q Year End 2002 Results
March 26, 2003
Page 4
PARALLEL PETROLEUM CORPORATION
CONDENSED BALANCE SHEET DATA
<table>
December 31,
--------------------------------------
2001 2002
----------------- -----------------
<s> <c> <c>
Current assets $ 5,259,529 $ 16,054,695
Net PP&E 29,830,186 85,688,226
Net deferred tax asset 6,137,670 -
Investment in First Permian, LP 473,764 -
Other assets 58,754 608,410
----------------- -----------------
Total assets $ 41,759,903 $ 102,351,331
================= =================
Current liabilities (1) $ 5,822,007 $ 7,515,312
Long term debt, excluding current maturities 9,600,000 45,604,167
Net deferred tax liability & other - 3,731,708
Stockholders' equity 26,337,896 45,500,144
----------------- -----------------
Total liabilities and stockholders' equity $ 41,759,903 $ 102,351,331
================= =================
Common shares outstanding 20,663,861 21,143,406
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</table>
(1) Includes $2,400,000 of current maturities of long-term debt in 2001 and
$4,145,833 in 2002
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<page>
Parallel Petroleum Announces 4Q & Year End 2002 Results
March 26, 2003
Page 5
PARALLEL PETROLEUM CORPORATION
STATEMENTS OF OPERATIONS
<table>
Three Months Ended December 31, Year Ended December 31,
----------------------------------------- ----------------------------------------
2001 2002 2001 2002
------------------- ------------------- ------------------ ------------------
<s> <c> <c> <c> <c>
Oil and gas revenues $ 1,948,796 $ 4,616,585 $ 17,840,024 $ 12,106,568
-------------- -------------- -------------- --------------
Cost and expenses:
Lease operating expense 897,775 958,379 3,920,840 2,877,370
General and administrative 380,607 862,403 1,346,454 2,152,909
Depreciation, depletion and amortization 1,495,286 2,209,276 6,318,105 6,220,179
Impairment of oil and gas properties 14,642,685 - 16,819,813 -
-------------- -------------- -------------- --------------
17,416,353 4,030,058 28,405,212 11,250,458
-------------- -------------- -------------- --------------
Operating income (loss) (15,467,557) 586,527 (10,565,188) 856,110
-------------- -------------- -------------- --------------
Other income (expense), net:
Equity in income (loss) of First Permian, LP 398,497 378,632 840,529 31,044,452
Incentive awards attributable to the sale of
First Permian, LP - - - (1,381,771)
Gain (loss) on sale in marketable securities - 211,506 - (717,034)
Change in fair market value of derivatives - (490,874) - (948,295)
Interest and other income 52,726 22,094 236,870 93,073
Dividend income - 64,168 - 371,040
Interest expense (160,442) (111,641) (802,017) (601,322)
Other expense (397,297) (24,755) (529,317) (331,763)
-------------- -------------- -------------- --------------
Total other income (expense), net (106,516) 49,130 (253,935) 27,528,380
-------------- -------------- -------------- --------------
Income (loss) before income taxes (15,574,073) 635,657 (10,819,123) 28,384,490
Income tax expense (benefit), net (5,507,728) 429,045 (6,111,548) 9,683,042
-------------- -------------- -------------- --------------
Net income (loss) $ (10,066,345) $ 206,612 $ (4,707,575) $ 18,701,448
============== ============== ============== ==============
Cumulative preferred stock dividend $ 146,175 $ 146,175 $ 584,700 $ 584,700
============== ============== ============== ==============
Net income (loss) available to
common stockholders $ (10,212,520) $ 60,437 $ (5,292,275) $ 18,116,748
============== ============== ============== ==============
Net income (loss) per common share:
Basic $ (0.50) $ 0.02 $ (0.26) $ 0.88
============== ============== ============== ==============
Diluted $ (0.50) $ 0.01 $ (0.26) $ 0.79
============== ============== ============== ==============
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</table>
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<page>
Parallel Petroleum Announces 4Q & Year End 2002 Results
March 26, 2003
Page 6
PARALLEL PETROLEUM CORPORATION
STATEMENTS OF CASH FLOWS
<table>
Year Ended December 31,
---------------------------------------
2001 2002
----------------- -----------------
<s> <c> <c>
Cash flows from operating activities:
Net income (loss) $ (4,707,575) $ 18,701,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and depletion 6,318,105 6,220,179
Impairment of oil and gas properties 16,819,813 -
Equity in income of First Permian, LP (840,529) (31,044,452)
Loss on sale of marketable securities - 717,034
Change in fair value of derivative instruments - 948,295
Income tax expense (benefit) (6,111,548) 9,683,042
Other, net 90,092 -
Changes in assets and liabilities:
Other, net 25,688 (549,656)
Decrease (increase) in accounts receivable 2,695,549 (1,608,477)
Decrease (increase) in prepaid expenses (179,954) (621,554)
Increase (decrease) in accounts payable and accrued liabilities (726,688) (388,357)
Purchase of derivative instruments - (530,605)
----------------- -----------------
Net cash provided by operating activities 13,382,953 1,526,897
----------------- -----------------
Cash flows from investing activities:
Additions to property and equipment (13,336,862) (61,770,670)
Proceeds from disposition of Energen Stock - 24,863,305
Proceeds from disposition of property and equipment 1,979,677 692,450
Distributions received from investment in First Permian, LP 5,937,878
----------------- -----------------
Net cash used in investing activities (11,357,185) (30,277,037)
----------------- -----------------
Cash flows from financing activities:
Borrowings from bank line of credit 2,000,000 53,435,589
Payments on bank line of credit (2,427,531) (15,685,589)
Proceeds from exercise of options and warrants 336,681 45,500
Payments of preferred stock dividend (584,700) (584,700)
----------------- -----------------
Net cash used in financing activities (675,550) 37,210,800
----------------- -----------------
Net increase in cash and cash equivalents 1,350,218 8,460,660
Beginning cash and cash equivalents 2,000,826 3,351,044
----------------- -----------------
Ending cash and cash equivalents $ 3,351,044 $ 11,811,704
================= =================
Non-Cash financing activities:
(Non-Cash) proceeds from sale of investment of First Permian, LP $ - $ (25,580,339)
Accrued stock dividend $ 24,363 $ 24,363
Issuance of stock for purchase of oil and gas property $ - $ 1,000,000
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</table>
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<page>
Parallel Petroleum Announces 4Q & Year End 2002 Results
March 26, 2003
Page 7
<table>
PARALLEL PETROLEUM CORPORATION
PRODUCTION AND PRICE DATA
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------------------- ------------------------------------------
2001 2002 2001 2002
-------------------- ------------------- ------------------- -------------------
<s> <c> <c> <c> <c>
Production:
Oil (Bbls) 28,021 39,071 138,243 130,810
Gas (Mcf) 589,263 853,074 3,266,350 2,669,983
EBO 126,232 181,250 682,635 575,807
Mcfe 757,389 1,087,500 4,095,808 3,454,843
Mcfe/day 8,232 11,821 11,221 9,465
Average sales price:
Oil (Bbls) $19.86 $26.66 $24.80 $24.59
Gas (Mcf) $2.37 $4.19 $4.41 $3.33
EBO $15.44 $25.47 $26.13 $21.03
Mcfe $2.57 $4.25 $4.36 $3.51
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</table>
The Company
Parallel Petroleum Corporation is headquartered in Midland, Texas and is an
independent energy company primarily engaged in the exploration, acquisition,
development and production of oil and gas using enhanced oil recovery techniques
including 3-D seismic technology. Additional information on Parallel Petroleum
Corporation is available at www.parallel-petro.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 "may," "will," "expect," "intend," "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,
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.
###