History

Founded in 1979, Parallel Petroleum has historically been an exploration company focusing on 3-D seismic, trying to make an oil or gas discovery that would increase its stockholders’ value immediately. In the second quarter of 2002, Parallel sold its First Permian, L.P. assets, realizing a $31 million net gain, and changed its business plan to focus more on lower risk acquisition and development of producing properties and less on higher risk exploration. The Company changed its business plan because of the risk associated with being solely an exploration company and its related boom and bust cycle. Over the last ten years, exploratory reserve targets have become smaller, deeper and more expensive, as confirmed by the industry’s average finding cost last year of approximately $10 per domestic barrel of oil equivalent (6 MCF = 1 BOE).