SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____________)

Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

PARALLEL PETROLEUM CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than
the Registrant)

Payment of Filing Fee (check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

PARALLEL PETROLEUM CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held
May 15, 1996

To Our Stockholders:

Notice is hereby given that the Annual Meeting of Stockholders of
Parallel Petroleum Corporation (the "Company") will be held at the Midland
Petroleum Club, 501 West Wall Street, Midland, Texas 79701, on Wednesday,
May 15, 1996 at 3:00 p.m., for the purpose of taking action on:

1. The election of the six current Directors to serve until the
next Annual Meeting of Stockholders and until their successors shall
be duly elected and qualified;

2. The ratification of the reappointment of KPMG Peat
Marwick as the Company's independent auditors for 1996; and

3. The transaction of such other business as may properly
come before the Annual Meeting or any adjournment thereof.

The Company's Board of Directors has fixed the close of business on
April 12, 1996 as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournment thereof.
This Notice of Annual Meeting, the Proxy Statement and the Proxy are being
mailed to stockholders of the Company beginning on or about April 15, 1996.
The principal executive office of the Company is located at One Marienfeld
Place, Suite 465, 110 N. Marienfeld, Midland, Texas 79701.

By Order of the Board of Directors

THOMAS W. ORTLOFF
Secretary
April 15, 1996

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND PROMPTLY RETURN YOUR SIGNED PROXY
IN THE POSTAGE PAID ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.

1
PARALLEL PETROLEUM CORPORATION

One Marienfeld Place, Suite 465
110 N. Marienfeld
Midland, Texas 79701
(915) 684-3727

PROXY STATEMENT
___________________

SOLICITATION OF PROXIES

The accompanying Proxy is solicited on behalf of the Board of Directors
of Parallel Petroleum Corporation (the "Company") in connection with the Annual
Meeting of Stockholders to be held at the Midland Petroleum Club, 501 West Wall
Street, Midland, Texas 79701, at 3:00 p.m. on Wednesday, May 15, 1996, for the
purposes set forth in the accompanying Notice of Annual Meeting, and at any
adjournments thereof.

The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Stockholders, Proxy Statement and Proxy, which are first being mailed
to the stockholders on or about April 15, 1996, will be borne by the Company.
It is contemplated that solicitation of Proxies will be primarily by mail, but
may be supplemented by personal solicitation by the Company's officers,
employees and Directors for which no additional compensation will be paid.

Any stockholder giving a Proxy may revoke it at any time before it is
voted by delivering a later dated Proxy, or by notifying the Secretary of the
Company either in person or by written notice specifically revoking the power to
use and vote the Proxy. Stockholder attendance and voting in person at the
Annual Meeting will also revoke any Proxy given by such stockholder. If no
specification is made on the Proxy, the shares will be voted in accordance with
the recommendation of the Board of Directors, as stated herein, or at the
discretion of the named proxies with regard to any other matter that may
properly come before the Annual Meeting.

VOTING AT THE ANNUAL MEETING

The close of business on April 12, 1996 has been fixed by the Company's
Board of Directors as the record date for the determination of stockholders
entitled to vote at the Annual Meeting of Stockholders. As of that date, the
Company had issued and outstanding 14,854,108 shares of $.01 par value Common
Stock.

The Company's Certificate of Incorporation does not permit cumulative
voting by the stockholders. The Common Stock is the Company's only class of
voting securities outstanding. Accordingly, each holder of Common Stock as of
the record date shall be entitled to cast one vote for each share of Common
Stock.

The holders of a majority of the issued and outstanding shares of
Common Stock entitled to vote, whether present in person or represented by
Proxy, constitutes a quorum at the Annual Meeting. Assuming the presence of a
quorum, the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by Proxy at the Annual Meeting is
required for the election of directors and for the ratification of the selection
by the Board of Directors of KPMG Peat Marwick as the Company's auditor for
1996. Shares of Common Stock represented in person or by Proxy (including
shares which abstain) will be counted for purposes of determining whether a
quorum is present at the Annual Meeting. Abstentions will be treated as shares
that are present and entitled to vote for purposes of determining the number of
shares present and entitled to vote with respect to any particular matter, but
will not be counted as a vote in favor of such matter. Accordingly, an
abstention from voting on a matter or a Proxy instructing that a vote be
withheld has the same effect as a vote against the matter since it is one less
vote for approval. Broker non-votes on one or more matters will have no impact
on such matters since they are not considered "shares present" for voting
purposes.

STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of April 12, 1996
with respect to the beneficial ownership of Common Stock by (i) each person
known to the Company to own beneficially more than five percent of the
outstanding Common Stock, (ii) each executive officer of the Company, (iii) each
Director and nominee for Director of the Company, and (iv) all executive
officers and Directors (and nominees) of the Company as a group:

Percent
Name and Address Amount and Nature of of
of Beneficial Owner Beneficial Ownership (1) Class (2)
- ------------------- ------------------------ ---------

Thomas R. Cambridge 887,045(3) 5.89%
216 Texas Commerce Bank Building
Amarillo, Texas 79109

Danny H. Conklin 120,624(4) *
730 First National Place I
Amarillo, Texas 79701

Ernest R. Duke 199,973(5) 1.35%
408 West Wall Street
Midland, Texas 79701

Myrle Greathouse 1,020,304(6) 6.86%
401 Cypress, Suite 519
Abilene, Texas 79601

Larry C. Oldham 781,090(7) 5.10%
One Marienfeld Place, Suite 465
Midland, Texas 79701

Charles R. Pannill 95,495(8) *
3416 Acorn Run
Fort Worth, Texas 76019

Wes-Tex Drilling Company 972,488(9) 6.55%
519 First National Bank Building West
Abilene, Texas 79601

All Executive Officers and Directors
as a Group (6 persons) 3,104,531(10) 19.74%

___________________

* Less than one percent.

(1) Unless otherwise indicated, all shares of Common Stock are held directly
with sole voting and investment powers.

(2) Securities not outstanding, but included in the beneficial ownership of each
such person are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person, but
are not deemed to be outstanding for the purpose of computing the percentage
of the class owned by any other person.

(3) Includes 200,000 shares of Common Stock underlying presently exercisable
stock options.

(4) Includes 25,000 shares of Common Stock underlying a presently exercisable
stock option.

(5) Includes 12,500 shares of Common Stock underlying a presently exercisable
stock option. Also included are 74,395 shares held by Duke and Cain
Partnership, a general partnership in which Mr. Duke is a partner, and
10,000 shares held in the name of Mr. Duke's wife. Mr. Duke has shared
voting and investment powers with respect to such shares.

(6) Includes 972,488 shares of Common Stock held directly by Wes-Tex Drilling
Company ("Wes-Tex"), a Texas corporation. Mr. Greathouse is the chairman
of the board of directors and sole shareholder of Wes-Tex and, accordingly,
has shared voting and investment powers with respect to such shares. Also

included are 25,000 shares of Common Stock underlying a presently
exercisable stock option, and 816 shares held by a twenty-two member
investment club, of which Mr. Greathouse is a member, and as to which Mr.
Greathouse has shared voting and investment powers. See note 9 below.

(7) Includes 587,000 shares of Common Stock underlying presently exercisable
stock options.

(8) Includes 25,000 shares of Common Stock underlying a presently exercisable
stock option. Also included are 1,300 shares held by Mr. Pannill as
custodian for the benefit of two minor grandchildren and as to which Mr.
Pannill disclaims beneficial ownership.

(9) Myrle Greathouse, a Director of the Company, is the chairman of the board
of directors and sole shareholder of Wes-Tex Drilling Company. Wes-Tex has
shared voting and investment powers with respect to such shares. See note
6 above.

(10) Includes 874,500 shares of Common Stock underlying presently exercisable
stock options.

Beneficial Ownership Reports

Section 16(a) of the Securities Exchange Act of 1934 requires, among
other things, that the Company's Directors and officers file at specified times
reports of beneficial ownership and changes in beneficial ownership of the
Company's Common Stock and other equity securities. To the Company's knowledge,
all Section 16(a) filing requirements have been complied with during the year
ended December 31, 1995.

ELECTION OF DIRECTORS

Directors of the Company are elected annually by the stockholders to
serve until the next annual meeting of stockholders and until their respective
successors are duly elected. The Bylaws of the Company provide that the number
of directors comprising the whole Board shall from time to time be fixed and
determined by resolution adopted by the Board of Directors. The Board of
Directors has fixed the size of the Board at six directors. Accordingly, the
Board of Directors is recommending that the six current Directors of the Company
be re-elected. If any nominee becomes unavailable for any reason, a substitute
nominee may be proposed by the Board of Directors and the shares represented by
Proxy will be voted for any substitute nominee, unless the Board reduces the
number of directors. The Board of Directors has no reason to expect that any
nominee will become unavailable. Unless otherwise directed in the accompanying
Proxy, it is the intention of the persons named in such Proxy to vote the shares
represented by such Proxy FOR the election of the following six nominees for the
offices of director of the Company to hold office until the next annual meeting
of stockholders and until their respective successors have been duly elected and
qualified:

Director
Nominee Age Since Position with Company
------- --- -------- ---------------------

Thomas R. Cambridge 60 1985 Chairman of the Board of Director
and Chief Executive Officer

Larry C. Oldham 42 1979 President, Treasurer and Director

Danny H. Conklin(1) 61 1985 Director

Ernest R. Duke(1) 68 1980 Director

Myrle Greathouse(2) 73 1993 Director

Charles R. Pannill(2) 69 1982 Director

_____________
(1) Member of Audit Committee
(2) Member of Compensation Committee

Mr. Cambridge is an independent petroleum geologist engaged in the
exploration for, development and production of oil and natural gas. From 1970
until 1990, such activities were carried out primarily through Cambridge & Nail
Partnership, a Texas general partnership. Since 1990, such oil and gas
activities have been carried out through Cambridge Production, Inc., a Texas

corporation. Mr. Cambridge received a Bachelors degree and a Masters of Science
degree in Geology from the University of Nebraska in 1958 and 1960,
respectively.

Mr. Oldham, a founder of the Company, has served as an officer and
Director of the Company since its formation in 1979. Prior to the Company's
formation, Mr. Oldham was employed by Dorchester Gas Corporation during the
period 1976 to 1979 and by KPMG Peat Marwick during 1975 to 1976. Mr. Oldham
became President of the Company in October, 1994, and served as Executive Vice
President of the Company prior to that time. He received a Bachelor of Business
Administration degree from West Texas State University in 1975. Mr. Oldham is
a member of the American Institute of Certified Public Accountants and a member
of the Permian Basin Landman's Association.

Mr. Conklin is an independent petroleum geologist and a principal
partner in Philcon Development Co., a privately held oil and gas exploration
partnership. Mr. Conklin is a director of Boatmens' First National Bank of
Amarillo, Amarillo, Texas, a director of Southwestern Public Service Company,
Amarillo, Texas, and former Chairman of the Independent Petroleum Association
of America. Mr. Conklin received a Bachelor of Science degree in Geology from
Oklahoma State University in 1957.

Mr. Duke is the president and majority shareholder of Mustang Mud,
Inc., a privately held oil field service company. He received a Bachelor of
Science degree in Geology from Southern Methodist University in 1950.

Mr. Greathouse is the chairman of the board of directors and sole
shareholder of Wes-Tex Drilling Company, a corporation engaged in contract
drilling of oil and gas wells and, to a lesser extent, oil and gas exploration
and production. Mr. Greathouse graduated from the University of Oklahoma in
1949 with a degree in Business Administration.

Mr. Pannill was employed by The Western Company of North America for
over thirty years until his retirement in February, 1982. During his employment
with The Western Company of North America, Mr. Pannill served in various
capacities, including those of an executive officer and director. He received a
Bachelor of Science degree in Geology from Texas A&M University in 1950.

Each officer of the Company is appointed annually by the Company's
Board of Directors to serve at the Board's discretion and until their respective
successors in office are elected and qualified. There are no family
relationships between any of the Directors or officers of the Company.

Other Information; Committees of the Board

During the fiscal year ended December 31, 1995, three meetings of the
Company's Board of Directors were held. All Directors were in attendance at the
meetings, except Mr. Duke was not present at one meeting, and Mr. Conklin was
not present at one meeting.

During 1995, the members of the Audit Committee were Mr. Conklin and
Mr. Duke. The function of the Audit Committee is to review the results of the
annual audit of the Company's financial statements and recommendations of the
independent auditors with respect to the Company's accounting practices,
policies and procedures and to recommend to the Board of Directors the
appointment of auditors for the Company. The Audit Committee held one meeting
in 1995 at which both members were present.

Messrs. Greathouse and Pannill served as members of the Compensation
Committee of the Board of Directors during 1995. The Compensation Committee
administers the Company's stock option plans and has the responsibility of
reviewing and recommending to the Board of Directors the compensation and
promotion of officers of the Company, the terms of any proposed employee benefit
arrangements and the making of awards under such arrangements. The Compensation
Committee took action one time during the fiscal year ended December 31, 1995.
Both members of the Compensation Committee participated in the consideration of
the compensation of the Company's executive officers and the recommendations to
the full Board of Directors.

The Company does not have a standing nominating committee. The review
of recommendations for nominees for Board membership is made by the full Board
of Directors.

EXECUTIVE COMPENSATION

Report of the Compensation Committee

The Compensation Committee (the "Committee") of the Board of Directors
is responsible for formulating and recommending to the full Board of Directors
the compensation paid to the Company's two executive officers. In reviewing the
overall compensation of the Company's executive officers, the Committee reviews
and considers the following components of executive compensation: cash
salaries, stock option grants, cash bonuses, insurance plans, and Company
contributions to the Company's 408(k) retirement plan. The Committee consists
of Myrle Greathouse and Charles R. Pannill, non-employee Directors of the
Company.

In establishing the compensation paid to the Company's executives, the
Committee emphasizes (i) providing compensation that will motivate and retain
the Company's executives and reward performance, (ii) encouraging the long-term
success of the Company, and (iii) encouraging the application of prudent
decision making processes in an industry marked by volatility and high risk.

Historically, the Committee has evaluated compensation paid to the
Company's executive officers annually based upon a variety of factors, including
the Company's growth in oil and gas reserves, the market value of the Company's
common stock, cash flow, the extent to which the Company's executive officers
are able to find and create opportunities for the Company to participate in
drilling or acquisition ventures having quality prospects, their ability to
formulate and maintain sound budgets for the Company's drilling ventures and
other business activities, the overall financial condition of the Company, and
the extent to which proposed business plans are met. The Committee does not
assign relative weights or rankings to these factors but instead makes a
subjective determination based upon a consideration of all such factors.

In establishing salaries for the Company's executive officers, the
Committee does not rely on formal surveys or comparisons with other companies,
but instead relies on their general knowledge and experience, focusing on a
subjective analysis of each executive's contributions to the Company's overall
performance. While specific performance levels or "benchmarks" are not used to
establish salaries, the Committee does take into account historic comparisons
of Company performance. With respect to awards of stock options, the Committee
tries to provide the Company's executives with an incentive compensation
vehicle that could result in future additional compensation to the executives,
but only if the value of the Company increases for all stockholders. All stock
options are granted with exercise prices equal to the fair market value of the
Company's common stock on the date of grant. When awarding stock options, the
Committee considers the number of options granted on prior occasions.

The Company does not provide significant perquisites to its employees
or Directors, and only one executive officer of the Company participates in the
Company's group insurance and retirement plans.

In the case of Mr. Cambridge, the Chief Executive Officer of the
Company, the factors considered by the Committee in establishing recommended
levels and components of compensation also include the amount of time devoted
by Mr. Cambridge to the business of the Company and the fact that he does not
participate in any of the Company's insurance or retirement plans. These
additional factors are included and considered in the evaluation of Mr.
Cambridge's compensation since he does not serve the Company as a full-time
employee. In August, 1995, and after considering the Company's overall
operating performance and the individual contributions made by the Company's
executive officers towards the achievement of these results, including the
sustained growth in the Company's oil and gas reserves, financing arrangements,
increased oil and gas production, and the increased responsibilities of Mr.
Cambridge generally associated with the Company's growth, the Committee
determined to increase the cash compensation paid to Mr. Cambridge from $61,200
per year to $64,260 per year, an increase of $255 per month, and award a 5% cash
bonus ($3,060). For the second consecutive year, the Committee determined that
it would not grant any stock options to either of the Company's executive
officers, including Mr. Cambridge. This decision is not a reflection on the
individual performance of the executive officers of the Company, but is
consistent with the Committee's conclusion that the amount of compensation,
and the components of such compensation, currently being paid to the Company's
executive officers are sufficient to motivate such officers and encourage
ongoing efforts directed towards increasing the value of the Company for all
stockholders.

Recently enacted provisions of the Internal Revenue Code that restrict
the deductibility of certain compensation over one million dollars per year has
not been a factor in the Committee's considerations or recommendations.

Myrle Greathouse
Charles R. Pannill
10

Summary of Annual Compensation

The Summary Compensation Table below sets forth for each of the three
fiscal years ended December 31, 1995, a summary of the types and amounts of
compensation paid to the executive officers of the Company.

Summary Compensation Table

Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
----------------------------- ------------------------- -------
Other
Annual Restricted Securities
Compen- Stock Underlying LTIP All Other
Name and Principal Year Salary Bonus sation Awards Options/ Payouts Compensation
Position ____ ($) ($) ($) ($) SARs(#) ($) ($)
------ ------- -------- -------- --------- -------- -----------

T.R. Cambridge 1995 $62,475 $3,560 $ 900 0 0 0 0
Chief Executive
Officer and 1994 $52,500 $ 500 $ 900 0 0 0 0
Chairman of
the Board of 1993 $51,500 $1,000 $ 900 0 100,000 0 0
Directors

L.C. Oldham 1995 $92,181 $5,015 $11,521(1) 0 0 0 $2,765(2)
President,
Treasurer 1994 $87,792 $4,800 $10,809(1) 0 0 0 $1,129(2)
and Director
1993 $85,571 $1,000 $10,317(1) 0 100,000 0 0

- -----------------------

(1) Such amount includes insurance premiums for nondiscriminatory group life,
medical, disability and dental insurance as follows: $9,171 for 1995;
$8,445 for 1994; and $7,779 for 1993.

(2) Such amount represents contributions made by the Company to Mr. Oldham's
individual retirement account maintained under the Company's 408(k)
simplified employee pension plan/individual retirement account as follows:
$2,765 for 1995; and $1,129 for 1994.

Stock Options

The Company has in the past utilized stock options as part of its
overall compensation of Directors, officers and employees. Narrative
descriptions of the Company's stock option plans and outstanding stock options
are set forth under the caption "Stock Option Plans" below. No stock options
were granted in 1995 to either of the Company's executive officers.

The following table sets forth certain information with respect to
stock option exercises during the fiscal year ended December 31, 1995 by the
executive officers of the Company and the value of each such executive officer's
unexercised stock options at December 31, 1995.

Aggregated Option/SAR Exercises in
Last Fiscal Year and Fiscal Year - End Option/SAR Values

Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Shares Options Options
Acquired at Fiscal Year-End (#) at Fiscal Year-End ($) (2)
on Value --------------------------- ----------------------------
Exercise Realized(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------- -------- ----------- ----------- ------------- ----------- --------------

T.R. Cambridge 35,000 $14,350 200,000 50,000 $172,500 0 (3)

L.C. Oldham 0 0 587,000 50,000 $666,720 0 (3)

_______________

(1) The value realized is equal to the fair market value of a share of Common
Stock on the date of exercise ($1.44 per share), based on the last sale
price of the Company's Common Stock, less the exercise price.

(2) Value of in-the-money options is equal to the fair market value of a share
of Common Stock at fiscal year-end ($1.79 per share), based on the last sale
price of the Company's Common Stock, less the exercise price.

(3) The unexercisable portion of a stock option held by the named executive
officer was not "in-the-money" at year-end, as the exercise price of such
option ($3.94) exceeded the fair market value ($1.79) of the Company's
Common Stock on such date.

12
STOCK PERFORMANCE GRAPH

Comparison of Five-Year Cumulative Total Returns

Company Market Peer
Date Index Index Index
- ---- ------- ------ -----

12/31/90 100.000 100.000 100.000
01/31/91 98.551 111.085 96.607
02/28/91 84.058 121.770 111.805
03/28/91 97.101 129.918 110.406
04/30/91 95.652 130.742 111.988
05/31/91 81.159 136.742 110.907
06/28/91 89.855 128.414 104.350
07/31/91 76.812 136.016 107.234
08/30/91 84.058 142.779 108.983
09/30/91 68.116 143.304 113.281
10/31/91 66.667 148.041 113.272
11/29/91 59.420 143.069 108.341
12/31/91 63.768 160.546 101.185
01/31/92 76.812 169.934 107.894
02/28/92 63.768 173.785 114.265
03/31/92 55.072 165.583 107.005
04/30/92 60.870 158.482 106.836
05/29/92 52.174 160.541 114.114
06/30/92 55.072 154.265 116.069
07/31/92 75.362 159.728 112.569
08/31/92 81.159 154.847 110.997
09/30/92 81.159 160.604 120.751
10/30/92 86.957 166.929 118.939
11/30/92 78.261 180.214 115.892
12/31/92 72.464 186.849 116.697
01/29/93 75.362 192.168 124.394
02/26/93 130.435 184.999 133.567
03/31/93 131.884 190.353 148.827
04/30/93 168.116 182.230 155.051
05/28/93 168.116 193.116 162.649
06/30/93 185.507 194.008 164.211
07/30/93 176.812 194.237 155.069
08/31/93 220.290 204.277 162.137
09/30/93 353.623 210.361 160.082
10/29/93 347.826 215.089 160.154
11/30/93 278.261 208.674 144.114
12/31/93 272.464 214.491 138.389

01/31/94 278.261 221.000 141.954
02/28/94 411.594 218.936 142.492
03/31/94 371.014 205.469 132.489
04/29/94 394.203 202.804 134.551
05/31/94 379.710 203.299 139.611
06/30/94 347.826 195.864 137.749
07/29/94 330.435 199.882 139.215
08/31/94 336.232 212.624 131.860
09/30/94 324.638 212.081 133.898
10/31/94 330.435 216.248 137.069
11/30/94 266.667 209.076 129.834
12/30/94 266.667 209.663 127.852
01/31/95 272.464 210.839 119.293
02/28/95 272.464 221.988 118.938
03/31/95 191.304 228.571 125.899
04/28/95 139.130 235.772 127.166
05/31/95 162.319 241.857 129.115
06/30/95 185.507 261.454 128.812
07/31/95 179.710 280.665 128.975
08/31/95 185.507 286.343 127.066
09/29/95 191.304 292.943 130.263
10/31/95 173.913 291.263 123.541
11/30/95 162.319 298.106 125.962
12/29/95 165.217 296.564 134.893

Legend

12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95

Parallel Petroleum Corporation 100.00 63.8 72.5 272.5 266.7 165.2
Nasdaq Stock Market (US Companies) 100.00 160.5 186.8 214.5 209.7 296.6
NASDAQ Stocks (SIC 1310-1319 US 100.00 101.2 116.7 138.4 127.9 134.9
Companies) Crude Petroleum and
Natural Gas

Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/90.

The indexes in the performance graph, prepared by the Center for
Research in Security Prices of the University of Chicago, compare the annual
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the Nasdaq Stock Market (U.S.) Index and a peer
group index comprised of 145 U.S. companies engaged in crude oil and natural
gas operations, based on a three-digit standard industrial classification
("SIC") code, whose stocks were traded on Nasdaq during the five year period
ended December 31, 1995. The table assumes that the value of an investment in
the Company's Common Stock and each index was $100 at the end of 1990 and that
all dividends were reinvested.

Change of Control Arrangements

The Company's outstanding stock options and stock option plans contain
certain "change of control" provisions which are applicable to the Company's
outstanding stock options, including the options held by Messrs. Cambridge and
Oldham, and other Directors of the Company. Such provisions include the
following: if (i) the Company is not the surviving entity in any merger or
consolidation, (ii) the Company sells, leases or exchanges all or substantially
all of its assets, (iii) the Company is to be dissolved and liquidated, (iv)
any person or group acquires beneficial ownership of more than 50% of the
Company's outstanding Common Stock, or (v) in connection with a contested
election of directors, the persons who were directors of the Company before
such election cease to constitute a majority of the Board of Directors (each
such event, a "Corporate Change"), then within (a) ten days after approval by
the stockholders of the Company of such merger, consolidation, sale, lease or
exchange of assets or dissolution or election of directors or (b) thirty days of
such change of control, the Compensation Committee (the "Committee") of the
Board of Directors shall effect one or more of the following alternatives: (1)
accelerate the time at which options may be exercised, (2) require the mandatory
surrender to the Company by optionees of some or all of such options, in which
event the Committee shall cancel such options and pay to each the "Change of
Control Value", (3) make such adjustments to such options as the Committee deems
appropriate to reflect such Corporate Change or (4) provide that thereafter upon
any exercise of an option theretofore granted the optionee shall be entitled to
purchase under such option, in lieu of the number of shares of Common Stock as
to which such option is then exercisable, the number and class of shares of
stock or other securities or property to which the optionee would have been
entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution the optionee had been
the holder of record of the number of shares of Common Stock as to which such
option is then exercisable. In the event of a Corporate Change, any then
outstanding options held by non-employee Directors shall become fully
exercisable on the fifth day following the approval by the stockholders of the
Company of such Corporate Change. The "Change of Control Value" is an amount
equal to, whichever is applicable, (i) the per share price offered to
stockholders of the Company in any merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to stockholders of the
Company in any tender offer or exchange offer whereby a Corporate Change takes
place, or (iii) if such Corporate Change occurs other than pursuant to a tender

or exchange offer, the fair market value per share of the shares into which such
options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be the date of cancellation and
surrender of such options.

Compensation of Directors

Messrs. Conklin, Duke, Greathouse and Pannill, non-employee Directors
of the Company, each receive $1,000 for attendance at meetings of the Board of
Directors and $500 for attendance at meetings of Board committees of which they
are members. All Directors are reimbursed for expenses incurred in connection
with attending meetings.

The Company's 1992 Stock Option Plan provides for the granting of a
one-time option to purchase 25,000 shares of the Company's Common Stock to each
individual who was a non-employee Director of the Company on March 1, 1992 and
to each individual who becomes a non-employee Director following March 1, 1992.
Each non-employee Director of the Company has been granted an option pursuant to
these provisions of the 1992 Plan. However, no options were granted in 1995
pursuant to such arrangements.

Stock Option Plans

1981 Non-Qualified Stock Option Plan. In May, 1981, the Company's
stockholders approved and adopted a Non-Qualified Stock Option Plan (the "1981
Plan") for its officers and employees. Although the 1981 Plan expired by its
own terms on March 31, 1991, one non-qualified stock option to purchase 35,000
shares of Common Stock, which was granted prior to March 31, 1991, remained
outstanding and subject to the terms of the 1981 Plan until such option was
exercised in June, 1995. The 1981 Plan authorized the granting of options to
purchase a total of 300,000 shares of the Company's Common Stock. All stock
options granted under the 1981 Plan were granted with exercise prices equal
to the fair market value of the Company's Common Stock on the date of grant.
Subject to the right of accumulation, options granted under the 1981 Plan
became exercisable as to 20% of the shares one year after the date of grant,
with an additional 20% becoming exercisable at the end of each year thereafter.
All options expired, unless earlier exercised, five years after the date of
grant. Options were not permitted to be granted to an optionee if, immediately
after the grant, the total number of shares of Common Stock beneficially owned,
directly or indirectly, or subject to options held by such employee, whether
then exercisable or not, exceeded 10% of the total combined voting power of all
classes of shares of the Company. The 1981 Plan was administered by the
Compensation Committee of the Company's Board of Directors. Members of the
Compensation Committee did not participate in the 1981 Plan.

1983 Incentive Stock Option Plan. In May, 1984, the Company's
stockholders approved and adopted the Company's 1983 Incentive Stock Option Plan
(the "1983 Plan"). Options granted under the 1983 Plan are intended to be

"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), which, generally, provides the
holder of an "incentive" option with certain favorable tax benefits. Under
the terms of the 1983 Plan, all employees of the Company were eligible to
participate. The 1983 Plan authorized the granting of options to purchase a
total of 750,000 shares of the Company's Common Stock. The exercise price
of options granted under the 1983 Plan must be at least equal to the fair
market value of the Company's Common Stock on the date of grant. Options
under the 1983 Plan may not be exercised until one year from the date of grant.
Subject to the right of accumulation, each option is exercisable as to one-
third of the shares optioned one year after the date of grant, with an
additional one-third of the shares becoming exercisable at the end of each
year thereafter. Options are cumulative and, to the extent not exercised in
each annual period, may be exercised in whole or in part three years after the
date of grant. All options expire, in any event, ten years after the date of
grant. Although the 1983 Plan expired by its own terms on May 19, 1993,
incentive stock options to purchase 537,000 shares of Common Stock, which were
granted prior to May 19, 1993, remain outstanding and subject to all of the
terms and conditions of the 1983 Plan. The 1983 Plan is administered by the
Compensation Committee of the Company's Board of Directors. Members of the
Compensation Committee are not eligible to participate in the 1983 Plan.

1992 Stock Option Plan. In May, 1992, the Company's stockholders
approved and adopted the Company's 1992 Stock Option Plan (the "1992 Plan").
The 1992 Plan provides for the granting to key employees (including officers and
Directors who are also key employees) of the Company and Directors who are not
employees of the Company of options to purchase up to an aggregate of 750,000
shares of Common Stock. Options granted under the 1992 Plan to employees may
be either incentive stock options within the meaning of Section 422 of the Code,
or options which do not constitute incentive stock options. Options granted to
non-employee Directors will not be incentive stock options.

The 1992 Plan is administered by the Board's Compensation Committee,
none of whom are eligible to participate in the 1992 Plan except to receive a
one-time option to purchase 25,000 shares at the time he becomes a Director.
The Compensation Committee has the sole authority to select the employees who
are to be granted options, to establish the number of shares issuable under
each option and to establish such terms and conditions as may be approved by
the Compensation Committee, except that the purchase price of Common Stock
issued under each option shall not be less than the fair market value of the
stock subject to the option at the time of grant.

The 1992 Plan provides for the granting of an option to purchase 25,000
shares of Common Stock to each individual who was a non-employee Director of the
Company on March 1, 1992 and to each individual who becomes a non-employee
Director following March 1, 1992. Members of the Compensation Committee are not
eligible, and shall not have been eligible at any time within one year prior to
their appointment to the Compensation Committee, to participate in a Company
stock plan, other than the eligibility of non-employee Directors to receive a

non-qualified stock option to purchase 25,000 shares of Common Stock as
described above, or to participate in any other Company stock plan which would
not cause such members to cease to be "disinterested persons" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934.

An option may be granted in exchange for an individual's right and
option to purchase shares of Common Stock pursuant to the terms of an agreement
that existed prior to the date such option is granted ("Prior Option"). An
option agreement that grants an option in exchange for a Prior Option must
provide for the surrender and cancellation of the Prior Option. The purchase
price of Common Stock issued under an option granted in exchange for a Prior
Option shall be determined by the Compensation Committee and, such purchase
price may, without limitation, be equal to the price for which the optionee
could have purchased Common Stock under the Prior Option.

The Board of Directors of the Company may amend or terminate the 1992
Plan at any time, but may not in any way terminate or restrict the rights of a
participant under an outstanding option without the consent of such participant.
The Board of Directors may not make any alteration or amendment which would
materially increase the benefits accruing to participants under the 1992 Plan,
increase the aggregate number of shares which may be issued pursuant to the
provisions of the 1992 Plan, change the class of individuals eligible to receive
options under the 1992 Plan, or extend the term of the 1992 Plan, without the
approval of the stockholders of the Company.

The 1992 Plan will terminate upon and no further options may be granted
thereunder after the expiration of ten years from the date of its adoption by
the Board of Directors.

Other Option Grants. In addition to the stock options granted pursuant
to the Company's 1981, 1983 and 1992 stock option plans, the Company has, on two
occasions, granted stock options to Mr. Cambridge pursuant to the general
corporate powers of the Company, rather than pursuant to such plans. Upon
recommendation of the Company's Compensation Committee, the Board of Directors
of the Company granted a non-qualified stock option to Mr. Cambridge to purchase
150,000 shares of Common Stock at an exercise price of $.64 per share, the fair
market value of the Common Stock on December 11, 1991, the date of grant. The
option became exercisable as to 50,000 shares on each of December 11, 1992,
1993, and 1994. On October 18, 1993, and upon further recommendation of the
Company's Compensation Committee, the Board of Directors granted a non-qualified
stock option to Mr. Cambridge to purchase 100,000 shares of Common Stock at an
exercise price of $3.9375 per share, the fair market value of the Common Stock
on the date of grant. The option is exercisable in four equal annual increments
of 25,000 shares, commencing on October 18, 1994. Neither option is
transferable other than by will or the laws of descent and distribution and both
options terminate ten years from the date of grant.

Retirement Plan

The Company maintains under Section 408(k) of the Code a combination
simplified employee pension ("SEP") and individual retirement account ("IRA")
plan (the "SEP/IRA") for eligible employees. Generally, eligible employees
include all employees who are at least twenty-one years of age.

Company contributions to employee SEP accounts may be made from time
to time at the discretion of the Company, as authorized from time to time by
the Compensation Committee of the Board of Directors, and the percentage of such
contributions may also vary from time to time. However, the same percentage
contribution must be made for all participating employees. The Company is not
required to make annual contributions to the employees SEP accounts. The
Company may make tax-deductible contributions for each employee participant of
up to 15% of such participant's compensation or $30,000, whichever is less.
Under the prototype simplified employee pension plan adopted by the Company,
all of the Company's SEP contributions must be made to SEP/IRAs maintained with
the sponsor of the plan, a national investment banking firm. All contributions
to employees' accounts are immediately 100% vested and become the property of
each employee at the time of contribution, including employer contributions,
income-deferral contributions and IRA contributions. Generally, earnings on
contributions to an employee's SEP/IRA account are not subject to federal income
tax until withdrawn.

In addition to receiving SEP contributions by the Company, employees
may make individual annual IRA contributions of up to the lesser of $2,000 or
100% of compensation. Each employee is responsible for the investment of funds
in his or her own SEP/IRA and can select investments offered through the sponsor
of the plan.

Distributions may be taken by employees at any time and must commence
by April 1st following the year in which the employee attains age 70 1/2.

The Company presently makes matching contributions to employee accounts
in an amount equal to the contribution made by each employee, not to exceed,
however, 3% of each such employee's salary during any calendar year. During the
fiscal year ended December 31, 1995, the Company contributed an aggregate of
$6,739 to the accounts of four employee participants, of which $2,765 was
allocated to the account of Mr. Oldham, the President and a Director of the
Company.

Certain Transactions

Historically, Wes-Tex Drilling Company ("Wes-Tex"), a Texas
corporation, has provided contract drilling and other related oil and gas
services to the Company in connection with the Company's oil and gas
exploration and development activities, and it is anticipated that Wes-Tex will
continue to perform contract drilling services for the Company in the future.
Myrle Greathouse, a director and the sole shareholder of Wes-Tex, has served as
a Director of the Company since December, 1993. During the year ended
December 31, 1995, the Company paid approximately $234,800 to Wes-Tex for
contract drilling services provided by Wes-Tex during 1994. The largest
aggregate amount outstanding and owed by the Company to Wes-Tex at one time
during the fiscal year ended December 31, 1995 was approximately $234,800.
At December 31, 1995, the Company was not indebted to Wes-Tex.

From time to time, Wes-Tex acquires undivided interests in oil and gas
leasehold acreage from the Company and participates with the Company and other
interest owners in the drilling and development of such acreage. Wes-Tex
participates in such operations under standard form operating agreements on the
same or similar terms afforded by the Company to nonaffiliated third parties.
The Company invoices all working interest owners, including Wes-Tex, on a
monthly basis, without interest, for their pro rata share of lease acquisition,
drilling and operating expenses. During the year ended December 31, 1995, the
Company billed Wes-Tex the aggregate amount of approximately $26,400 for
Wes-Tex's proportionate share of lease operating expenses incurred on properties
operated by the Company. The largest amount owed to the Company by Wes-Tex at
any one time during the year ended December 31, 1995 for its share of lease
operating expenses was approximately $12,000, and at December 31, 1995, Wes-Tex
owed the Company approximately $1,600 for such expenses. During the fiscal year
ended December 31, 1995, the Company disbursed approximately $93,800 to Wes-Tex
in payment of revenues attributable to Wes-Tex's pro rata share of the proceeds
from sales of gas and oil produced from properties in which Wes-Tex and the
Company owned interests.

In February, 1995, the Company privately placed 644,150 shares of its
Common Stock for the urpose of repaying a portion of the Company's bank debt.
Wes-Tex purchased 40,000 shares of Common Stock for $100,000 and Barbara Duke,
the wife of E. R. Duke, a Director of the Company, purchased 10,000 shares for
$25,000. The shares were purchased on the same terms as all other investors in
the offering.

E. R. Duke, a Director of the Company, is the sole shareholder and
director of Mustang Mud, Inc. ("Mustang"), an oil field service company
primarily engaged in the sale and application of drilling fluids and chemicals
used in the drilling of wells. The Company has, in the past, purchased supplies
and services from Mustang in connection with the Company's drilling activities.
Although the Company did not purchase any supplies or services from Mustang in
1995, the Company paid approximately $2,500 to Mustang in 1995 for supplies and

services provided by Mustang in 1994. The Company was not indebted to Mustang
at December 31 1995.

Mr. Duke and Mustang each own interests in three oil properties in
which the Company also owns interests, two of which are operated by the Company.
In 1995, the Company billed Mr. Duke and Mustang the aggregate amount of
approximately $12,100 and $2,300, respectively, for lease operating expenses.
During the same period, Mr. Duke and Mustang paid the Company approximately
$11,500 and $2,300, respectively. At December 31, 1995, Mr. Duke and Mustang
owed the Company approximately $1,200 and $120, respectively, for their pro rata
share of lease operating expenses. During 1995, the Company disbursed
approximately $69,600 and $3,500, respectively, to Mr. Duke and Mustang in
payment of their pro rata share of the proceeds from sales of oil produced
from properties in which Mr. Duke, Mustang and the Company owned interests.

During the year ended December 31, 1995, Cambridge Production, Inc.
("CPI"), a corporation owned by Mr. Cambridge, served as operator of 18 wells
on oil and gas leases in which the Company owned an interest. Generally, the
operator of a well is responsible for the day to day operations on the lease,
overseeing of production, employment of field personnel, maintenance of
production and other records, determining the location and timing of drilling
of wells, gas contract administration, joint interest billings, revenue
distribution, making various regulatory filings, reporting to working interest
owners and other matters. During 1995, CPI billed the Company approximately
$348,000, which included $201,000 for the Company's pro rata share of lease
operating expenses and $147,000 for the Company's pro rata share of drilling
expenses. Of the total amount billed to the Company, approximately $330,000
was paid by the Company to CPI during 1995. The largest amount owed by the
Company to CPI at any one time during 1995 was approximately $59,800, and at
December 31, 1995, the Company owed CPI approximately $20,600. CPI's billings
to the Company are made monthly on the same basis as made to all other working
interest owners in the wells. The Company's pro rata share of oil and gas
sales during 1995 from the wells operated by CPI was approximately $130,000.

The Company owns a 25% working interest in the Southeast Leedey
Prospect in Custer County, Oklahoma, which is operated by Philcon Development
Co. ("Philcon"), a privately owned partnership engaged in the exploration for,
development and production of oil and gas. Danny H. Conklin, a Director of the
Company, is a principal partner of Philcon. During 1995, the Company paid
Philcon approximately $74,700 for the Company's pro rata share of lease costs
and related drilling and operating expenses, of which $4,124 was billed by
Philcon to the Company in 1995 and the remainder of which was billed to the
Company in 1994. The Company was not indebted to Philcon at December 31, 1995.
The largest aggregate amount outstanding and owed by the Company to Philcon at
any one time during 1995 was approximately $70,300.

Management of the Company believes that each of the above referenced
transactions was made on terms no less favorable than if such transactions had
been entered into with an unrelated party.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors, subject to ratification by the stockholders at
the Annual Meeting, has reappointed KPMG Peat Marwick, independent public
accountants, as independent auditors for the year 1996. If the stockholders do
not ratify this appointment, the Board may consider other independent public
accountants or continue the appointment of KPMG Peat Marwick. KPMG Peat Marwick
has been the Company's independent accountants since 1979.

Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting of Stockholders and will be afforded an opportunity to make a
statement at the Annual Meeting if they desire to do so. It is expected that
such representatives will be available to respond to appropriate questions.

Stockholders are requested to vote FOR the ratification of the
reappointment of KPMG Peat Marwick as the Company's independent auditors for the
fiscal year ending December 31, 1996.

OTHER MATTERS

The Company's Board of Directors does not know of any other business
to be presented at the Annual Meeting of Stockholders. If any other matter
properly comes before the Annual Meeting, however, it is intended that the
persons named in the enclosed Proxy will vote said Proxy in accordance with
their best judgment on such matters.

Stockholders may obtain, without charge, a copy of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 as filed with the
Securities and Exchange Commission upon written request addressed to the
Secretary of the Company, One Marienfeld Place, Suite 465, 110 N. Marienfeld,
Midland, Texas 79701.

STOCKHOLDER PROPOSALS

Stockholders desiring to submit proposals for action at the Company's
1996 annual meeting of stockholders must submit such proposals to the Company at
its principal executive office on or before December 28, 1996. Proposals should

be sent to the Secretary of the Company, One Marienfeld Place, Suite 465, 110
N. Marienfeld, Midland, Texas 79701. The use of certified mail, return receipt
requested, is suggested.

By Order of the Board of Directors

THOMAS W. ORTLOFF
Secretary

Midland, Texas
April 15, 1996

PARALLEL PETROLEUM CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - MAY 15, 1996

PROXY

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Thomas R. Cambridge and Larry C. Oldham,
severally, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Common Stock of PARALLEL PETROLEUM CORPORATION of record in the name of
the undersigned at the close of business on April 12, 1996, which the
undersigned is entitled to vote at the 1996 Annual Meeting of Stockholders of
the Company and at any and all adjournments thereof, with respect to the
matters set forth below and described in the Notice of Annual Meeting and Proxy
Statement dated April 15, 1996, receipt of which is acknowledged.

1. ELECTION OF DIRECTORS:

___ FOR ALL NOMINEES LISTED BELOW ___ WITHHOLD AUTHORITY
(except as marked to the contrary) (to vote for all nominees below)

(INSTRUCTIONS: To withhold authority to vote for any nominee below,
strike a line through the nominee's name)

Thomas R. Cambridge, Danny H. Conklin, Ernest R. Duke, Myrle Greathouse,
Larry C. Oldham, Charles R. Pannill.

2. APPROVAL OF SELECTION OF KPMG PEAT MARWICK AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY.

___ FOR ___ AGAINST ___ ABSTAIN

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any and all adjournments
thereof.

This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s). If no indication is made, this Proxy will
be voted FOR Proposals 1 and 2.

______________________________________________________________
Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian , please
give full title as such. If a corporation, please sign in
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized
person.

______________________________________________________________
Signature

______________________________________________________________
Signature if held jointly

______________________________________________________________

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED POSTAGE PRE-
PAID ENVELOPE.
______________________________________________________________

DATED ___________________________, 1996