750561--2/20/2008--PARALLEL_PETROLEUM

related topics

{debt, indebtedness, cash}

{gas, price, oil}

{stock, price, share}

{loss, insurance, financial}

{stock, price, operating}

{operation, natural, condition}

{provision, law, control}

{control, financial, internal}

{loan, real, estate}

{acquisition, growth, future}

{personnel, key, retain}

{competitive, industry, competition}

{regulation, change, law}

{condition, economic, financial}

We are subject to uncertainties in reserve estimates and future net cash flows. Competition in the oil and natural gas industry is intense, and many of our competitors have greater financial, technological and other resources than we do. We do not control all of our operations and development projects, which may adversely affect our production, revenues and results of operations. Our business is subject to many inherent risks, including operating risks, which may result in substantial losses, and insurance may be unavailable or inadequate to protect us against these risks. The oil and natural gas industry is capital intensive. There are risks in acquiring producing properties, including difficulties in integrating acquired properties into our business, additional liabilities and expenses associated with acquired properties, diversion of management attention, increasing the scope, geographic diversity and complexity of our operations and incurrence of additional debt. We could experience delays in securing drilling equipment and crews, which would cause us to fail to meet our drilling plans and negatively impact our operations. The marketability of our natural gas production depends on facilities that we typically do not own or control. Our producing properties are geographically concentrated. Our derivative activities create a risk of financial loss. We are subject to complex federal, state and local laws and regulations that could adversely affect our business. Declining oil and natural gas prices may cause us to record ceiling test write-downs. Terrorist activities may adversely affect our business. We are highly dependent upon key personnel. Part of our business is seasonal in nature. Failure to maintain effective internal controls could have a material adverse effect on our operations. Our business can be adversely impacted by downward changes in oil and natural gas prices, and most significantly by declines in oil prices. A shortage of available drilling rigs, equipment and personnel may delay or restrict our operations. Risks Relating to Our Common Stock We do not pay dividends on our common stock. Our stockholders rights plan, provisions in our corporate governance documents and Delaware law may delay or prevent an acquisition of Parallel, which could decrease the value of our common stock. Future sales of our common stock could adversely affect our stock prices. The price of our common stock may fluctuate which may cause our common stock to trade at a substantially lower price than the price which you paid for our common stock. If securities analysts downgrade our stock or cease coverage of us, the price of our stock could decline. Risks Relating to Our 10 1 / 4 % Senior Notes and Our Other Indebtedness We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our debt, including our 10 1 / 4 % senior notes We may incur substantially more debt, which may intensify the risks described above, including our ability to service our indebtedness To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt obligations could harm our business, financial condition and results of operations Restrictive debt covenants in the Indenture and the amended and restated credit agreement governing our revolving credit facility restrict our business in many ways. Our borrowings under our revolving credit facility expose us to interest rate risk. We are subject to many restrictions under our revolving credit facility. If we default under our revolving credit facility, the lenders could foreclose on, and acquire control of, substantially all of our assets. Our 10 1 / 4 % senior notes are structurally subordinated to any of our secured indebtedness to the extent of the assets securing such indebtedness. A subsidiary guarantee could be voided if it constitutes a fraudulent transfer under U.S. bankruptcy or similar state laws, which would prevent the holders of our 10 1 / 4 % senior notes from relying on the subsidiary to satisfy our payment obligations under the 10 1 / 4 % senior notes

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750561--2/20/2008--PARALLEL_PETROLEUM_CORP