UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 16, 2005
PARALLEL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-13305 75-1971716
(Commission file number) (IRS employer identification number)
1004 N. Big Spring, Suite 400, Midland, Texas 79701
(Address of principal executive offices) (Zip code)
(432) 684-3727
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 16, 2005, Parallel Petroleum Corporation issued a press
release announcing its results of operations for the fiscal year ended December
31, 2004 and for the fourth quarter ended December 31, 2004. The press release
issued on March 16, 2005 is furnished as Exhibit No. 99 to this Current Report
on Form 8-K. Parallel's reports on Forms 10-K, 10-Q and 8-K and other publicly
available information should be consulted for other important information about
Parallel.
The information in this Current Report on Form 8-K, including Exhibit
No. 99 hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability
of that section. The information in this Current Report shall not be
incorporated by reference into any filing or other document pursuant to the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such filing or document.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
The Exhibit listed below is furnished as an Exhibit to this Current
Report on Form 8-K.
Exhibit No. Description of Exhibit
----------- ----------------------
99 Press release issued March 16, 2005
(furnished pursuant to Item 2.02)
-2-
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 hereunto duly authorized.
PARALLEL PETROLEUM CORPORATION
By:/s/ Larry C. Oldham
----------------------------------------
Larry C. Oldham, President
and Chief Executive Officer
Dated: March 16, 2005
-3-
EXHIBIT INDEX
Exhibit No. Description
---------- -----------
*99 Press release issued March 16, 2005 (furnished
pursuant to Item 2.02)
----------------
*Filed herewith.
Exhibit 99
PRESS RELEASE
Parallel Petroleum Corporation
1004 N. Big Spring, Suite 400 Contact: Cindy Thomason
Midland, TX 79701 (432) 684-3727 Manager of Investor Relations
http://www.plll.com cindyt@plll.com
PARALLEL PETROLEUM ANNOUNCES
FOURTH QUARTER AND YEAR END 2004 FINANCIAL RESULTS
MIDLAND, Texas, (BUSINESS WIRE), March 16, 2005 - Parallel Petroleum Corporation
(NASDAQ: PLLL) today announced its financial results for the fourth quarter and
year ended December 31, 2004. In a separate press release dated March 15, 2005,
Parallel announced its operations update. In a prior press release dated January
11, 2005, the Company announced its 2004 year end reserves, operations update,
and its $43.7 million 2005 capital investment budget.
Fourth Quarter Results
For the three months ended December 31, 2004, Parallel reported net income of
$2.0 million, or $.07 per diluted share. Operating income was $5.3 million,
after oil and gas hedge payments of $3.0 million. For the three months ended
December 31, 2003, Parallel recorded net income of $1.0 million, or $.04 per
diluted share, which included $1.7 million of operating income, after oil and
gas hedge payments of $0.5 million.
For the fourth quarter of 2004, Parallel's sales were 234 MBbls of oil and 695
MMcf of natural gas, or 349 MBOE. During this period, the average prices the
Company received for its oil and natural gas on an unhedged/hedged basis,
respectively, were $44.07/$32.68 per barrel and $6.99/$6.56 per Mcf, or
$43.36/$34.90 per BOE. For the same period of 2003, oil sales were 157 MBbls at
an average unhedged/hedged price of $26.87/$22.56 per barrel and natural gas
sales were 874 MMcf at an average price of $5.02/$5.22 per Mcf, or 303 MBOE at
$28.43/$26.77 per BOE.
Year End Results
For the twelve months ended December 31, 2004, Parallel reported net income of
$5.6 million, or $.20 per diluted share. Operating income was $12.2 million,
after oil and gas hedge payments of $8.4 million. For the twelve months ended
December 31, 2003, Parallel recorded net income of $7.7 million, or $.31 per
diluted share, which included $12.7 million of operating income, after oil and
gas hedge payments of $2.6 million.
For the twelve months ended December 31, 2004, Parallel's sales were 729 MBbls
of oil and 2,690 MMcf of natural gas, or 1,177 MBOE. During this period, the
average prices the Company received for its oil and natural gas on an
unhedged/hedged basis, respectively, were $39.05/$28.82 per barrel and
$5.85/$5.52 per Mcf, or $37.55/$30.45 per BOE. For the same period of 2003, oil
sales were 629 MBbls at an average unhedged/hedged price of $29.11/$26.47 per
barrel and natural gas sales were 3,356 MMcf at an average price of $5.40/$5.13
per Mcf, or 1,188 MBOE at $30.66/$28.50 per BOE.
Net cash provided by operating activities for the twelve-month period ended
December 31, 2004, was $17.7 million, compared to $19.5 million for the same
period of 2003. The decrease was primarily related to increases in oil hedge
payments, lease operating expenses and general and administrative expenses, of
which the largest increase was in public reporting costs associated with
Sarbanes-Oxley 404 compliance.
Balance Sheet Review
At December 31, 2004, current assets were $14.5 million, which included $4.8
million of cash. Current liabilities were $13.7 million, including current
derivative obligations of $8.0 million, and long-term debt was $79.0 million.
The Company's net capitalized costs associated with its oil and gas properties
and other equipment were $152.5 million. Parallel's stockholders' equity as of
December 31, 2004 was $60.0 million, which includes $10.8 million of accumulated
comprehensive loss that is related to the Company's oil and gas hedges.
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Parallel Petroleum Announces 4Q and Year End 2004 Results
March 16, 2005
Page 2
Recent Equity Offering
Parallel announced on February 9, 2005, that it sold 5,750,000 shares of its
common stock pursuant to a public offering at a price of $5.27 per share,
resulting in net proceeds of approximately $28.0 million. The common shares were
issued under Parallel's universal shelf registration statement on Form S-3. The
Company applied the $28.0 million to its line of credit, thereby reducing
long-term debt to approximately $50.0 million.
Recent Non-Strategic Asset Divestiture
In January 2005, Parallel divested interests in 6 Permian Basin assets, located
in Howard County, Texas, to an unaffiliated third party. Net proceeds from the
sale were approximately $2.5 million and resulted in a net reduction in the
Company's production of approximately 60 BOE per day. These properties
represented less than 0.2% of the Company's total proved reserves as of December
31, 2004. Parallel will continue to evaluate all portfolio assets for economic
viability and strategic fit.
First Quarter 2005 Expected Pre-tax, Non-cash Loss on "Ineffective Portion of
Oil Hedges"
As described in the "Hedging Information" table within this press release, the
Company currently has approximately 2.1 million barrels of oil hedged for the
next 48 months (through 2008) at NYMEX prices ranging from $28.46 to $49.60 per
barrel. These hedges are directly related to the Fullerton acquisitions in
December 2002 and September 2004, and the Carm-Ann acquisition in September
2004. The Company's composite average differential between the hedged NYMEX
price and the realized wellhead price has historically been approximately $2.50
per barrel; however, the differential has recently increased to approximately
$4.50 per barrel, because the majority of the Company's oil is West Texas Sour.
(West Texas Sour oil has a higher differential from NYMEX price than West Texas
Sweet oil.) Assuming that this composite average differential remains in the
$4.50 range, the Company expects to record a pre-tax, non-cash loss of
approximately $1.2 million on "ineffective portion of oil hedges" during the
first quarter of 2005.
Management Comments
Larry C. Oldham, Parallel's President, commented, "As I commented in our
Operations Update that was released on March 15, 2005, the cash infusion
provided by our recent common stock offering combined with our existing bank
facility and operating cash flow has given us the financial flexibility to
accelerate our 2005 development activity."
Oldham further commented, "Although our fourth quarter 2004 production volumes
were up 28% over third quarter 2004 volumes, we expect first quarter 2005
production volumes to decrease approximately 5% compared to fourth quarter 2004
volumes. The expected decrease is due to asset sales, normal decline on existing
production and the timing of new production associated with the Company's 2005
development activities. We anticipate production and reserve volumes to increase
in future quarters as we continue to ramp up our drilling and exploitation
activity levels."
In a final comment, Oldham stated, "The expected increases in production and
reserve volumes will reflect our execution of the `acquire and exploit' business
model that we implemented in June 2002. We believe our commitment to this model
will yield consistent growth in production and reserves over time."
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Parallel Petroleum Announces 4Q and Year End 2004 Results
March 16, 2005
Page 3
Today's Earnings Conference Call and Webcast Information
The Company's management will host a conference call to discuss its financial
and operational results for the fourth quarter and year ended December 31, 2004,
this afternoon, Wednesday, March 16, 2005, at 2:00 p.m. Eastern time (1:00 p.m.
Central time). To participate in the call, dial 1-800-591-6923 or
1-617-614-4907, Participant Passcode 81315445, at least five minutes before the
scheduled start time. The conference call will also be webcast with slides, and
can be accessed live at Parallel's web site, www.plll.com. A replay of the
conference call will be available at the Company's web site or by calling
1-888-286-8010 or 1-617-801-6888, Passcode 49322722. A written transcript of the
conference call, and the supporting slide presentation, will be available on the
Company's web site Presentation page at
http://phx.corporate-ir.net/phoenix.zhtml?c=79538&p=irol-presentations.
Upcoming Presentations
Parallel's President & CEO, Larry Oldham, will host breakfast meetings on
Tuesday, April 5, 2005, and Wednesday, April 6, 2005, at 7:00 a.m. Central time
at Howard Weil's 33rd Annual Energy Conference at the Sheraton New Orleans
Hotel, 500 Canal Street, New Orleans, Louisiana. Parallel's Howard Weil Energy
Conference presentation slides will be available on the Company's web site,
http://www.plll.com, prior to their breakfast meetings.
Financial statements and schedules folloW
PARALLEL PETROLEUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(dollars in millions)
December 31, December 31,
2004 2003
------------------- -------------------
ASSETS
Current assets $ 14.5 $ 23.6
Net property and equipment 152.5 94.0
Other assets, net 3.7 0.7
----------- ----------
Total $ 170.7 $ 118.3
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 13.7 $ 7.2
Long-term debt, net 79.0 39.8
Deferred tax 6.5 5.8
Derivative obligations 9.5 2.7
Asset retirement obligations 2.0 1.6
Stockholders' equity 60.0 61.2
----------- ----------
Total $ 170.7 $ 118.3
=========== ==========
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Parallel Petroleum Announces 4Q and Year End 2004 Results
March 16, 2005
Page 4
PARALLEL PETROLEUM CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT DATA
(in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------------------- --------------------------------
2004 2003 2004 2003
---------------- ----------------- ---------------- --------------
Oil and gas revenues $ 12.1 $ 8.0 $ 35.8 $ 33.8
Total costs and expenses 6.8 6.3 23.6 21.1
---------- ----------- ---------- ----------
Operating income 5.3 1.7 12.2 12.7
---------- ----------- ---------- ----------
Total other expense, net (2.5) (0.6) (3.8) (2.0)
---------- ----------- ---------- ----------
Income before income taxes 2.8 1.1 8.4 10.7
Income tax expense, deferred (0.8) (0.1) (2.8) (3.0)
---------- ----------- ---------- ----------
Net income before cumulative effect 2.0 1.0 5.6 7.7
of change in accounting principle
Cumulative effect on prior years - - - (0.1)
of a change in accounting principle, net of tax
---------- ----------- ---------- ----------
Net income 2.0 1.0 5.6 7.6
Cumulative preferred stock dividend (0.2) (0.2) (0.6) (0.6)
---------- ----------- ---------- ----------
Net income available to common stockholders $ 1.8 $ 0.8 $ 5.0 $ 7.0
========== =========== ========== ==========
Net income per common share:
Basic - after accounting change $ 0.07 $ 0.04 $ 0.20 $ 0.33
Diluted - after accounting change $ 0.07 $ 0.04 $ 0.20 $ 0.31
Weighted average common shares outstanding:
Basic 25.4 21.1 25.3 21.3
Diluted 28.6 24.1 28.4 24.2
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PARALLEL PETROLEUM CORPORATION
SALES VOLUMES AND PRICE DATA
Three Months Ended Year Ended
December 31, December 31,
---------------------------------- ----------------------------------
2004 2003 2004 2003
---------------- ----------------- ---------------- ----------------
Sales Volumes:
Oil (MBbls) 234 157 729 629
Natural gas (MMcf) 695 874 2,690 3,356
Equivalent barrels of oil (MBOE) (a) 349 303 1,177 1,188
Equivalent barrels of oil (BOE) per day 3,791 3,289 3,216 3,246
Average Sales Prices:
per Bbl (unhedged) (b) $ 44.07 $ 26.87 $ 39.05 $ 29.11
per Bbl (hedged) (c) $ 32.68 $ 22.56 $ 28.82 $ 26.47
per Mcf (unhedged) (b) $ 6.99 $ 5.02 $ 5.85 $ 5.40
per Mcf (hedged) (c) $ 6.56 $ 5.22 $ 5.52 $ 5.13
per BOE (unhedged) (b) $ 43.36 $ 28.43 $ 37.55 $ 30.66
per BOE (hedged) (c) $ 34.90 $ 26.77 $ 30.45 $ 28.50
------------------------------------------------------------------------------
(a) A BOE means one barrel of oil equivalent using the ratio of six Mcf of gas
to one barrel of oil. "MBOE" means one thousand BOE.
(b) Unhedged price is the actual price received at the wellhead for our oil and
natural gas.
(c) Hedged price is the actual price received at the wellhead for our oil and
natural gas plus or minus the settlements on our derivatives.
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Parallel Petroleum Announces 4Q and Year End 2004 Results
March 16, 2005
Page 5
PARALLEL PETROLEUM CORPORATION
HEDGING INFORMATION (a)
COSTLESS COLLARS: NYMEX Houston Ship Channel
Oil Prices Gas Prices
Barrels of --------------------------- MMBTU of ---------------------------
Period of Time Oil Floor Cap Natural Gas Floor Cap
----------------------------------- ------------- ------------- ------------- ----------------- ------------- -------------
Apr 1, 2005 thru Oct 31, 2005 - - - 428,000 $5.00 $7.26
Jan 1, 2005 thru Dec 31, 2005 73,000 $36.00 $49.60 - - -
Jan 1, 2006 thru Dec 31, 2006 70,800 $35.00 $44.00 - - -
SWAPS: Houston
Volume NYMEX Volume Ship Channel
Hedged Oil Hedged Gas
Period of Time Bbl Oil Swap Price MMBTU Swap Price
----------------------------------- ------------- ------------- ------------- -----------------
Jan 1, 2005 thru Dec 31, 2005 620,500 $30.19 - -
Jan 1, 2005 thru Mar 31, 2005 - - 180,000 $4.705
Jan 1, 2006 thru Dec 20, 2006 448,000 $28.46 - -
Jan 1, 2007 thru Dec 31, 2007 474,500 $34.36 - -
Jan 1, 2008 thru Dec 31, 2008 439,200 $33.37 - -
INTEREST RATE SWAPS: Notional Fixed
Amount Interest
Period of Time $MM Rates
----------------------------------- ------------- -------------
Jan 1, 2005 thru Dec 31, 2005 $50 3.36%
Jan 1, 2006 thru Dec 31, 2006 $50 3.82%
Jan 1, 2007 thru Dec 31, 2007 $50 4.30%
Jan 1, 2008 thru Dec 30, 2008 $50 4.74%
-----------------------------------
(a) BNP Paribas is the counterparty in Parallel's derivative instruments.
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The Company
Parallel Petroleum Corporation is headquartered in Midland, Texas and is an
independent energy company primarily engaged in the acquisition, development,
exploration and production of oil and gas using enhanced oil recovery techniques
and 3-D seismic technology. Additional information on Parallel Petroleum
Corporation is available at www.plll.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.
###