Parallel Petroleum Announces Its First Company Operated Horizontal Wolfcamp Gas Completion and Acquisition of Additional Leasehold in New Mexico Project

This well is located in Area 3 of the Company's Wolfcamp gasproject approximately 22 miles southwest of Artesia, New Mexico. Itwas originally drilled to a total depth of 7,610 feet under a farm-outagreement as an obligatory, but unsuccessful, Morrow formation test.The well was subsequently plugged backed to the Wolfcamp formationwhere a horizontal lateral of approximately 2,600 feet was drilled,cased, cemented and selectively perforated and fracture stimulated inthree stages. Parallel owns working and net revenue interests in theBoxtop 1921-1 Federal No. 1 well of approximately 47% and 36%,respectively.

A second well, the Mara State No. 1, has reached total depth witha lateral length of approximately 3,850 feet. A third well, the MatchBox Federal No. 1, is currently drilling ahead approximately 850 feetout in the horizontal portion of the well, with a projected laterallength of approximately 4,000 feet. These two wells are located eastof the Boxtop 1921-1 Federal No. 1 well at distances of approximately1 1/4 miles and 3/4 mile, respectively. Parallel's working and netrevenue interests are approximately 75% and 56%, respectively, for theMara State No. 1 well, and approximately 46% and 36%, respectively,for the Match Box Federal No. 1 well.

The Company has recently increased its leasehold position in Area3 by approximately 46%, thereby increasing its combined leaseholdposition in its entire New Mexico Wolfcamp gas project byapproximately 17%. Currently, Parallel's leasehold is approximately25,000 gross (16,000 net) acres in Area 3, approximately 77,000 gross(35,000 net) acres in Area 2, and approximately 63,000 gross (4,600net) acres in Area 1, which brings its total leasehold position in theproject to approximately 165,000 gross (55,000 net) acres.

Background Information

The New Mexico Wolfcamp horizontal resource gas play, as definedby Parallel Petroleum, encompasses approximately 300,000 gross acresin portions of Eddy and Chaves Counties in southeastern New Mexico.Geologically, the play is described as a broad area of gas-saturated,low permeability Wolfcamp dolomite, which historically has respondedrelatively poorly to conventional drilling and completion techniques.The introduction of horizontal drilling and multi-stage fracturecompletion techniques since mid-2004 has improved production responsefrom the rock, thereby increasing industry interest in the play. Todate, approximately 100 horizontal permits have been approved by stateand federal regulatory agencies. Current New Mexico Oil ConservationDivision regulations allow for minimum 160-acre horizontal spacing,which appears to be validated by early results from recent 160-acrehorizontal wells drilled and completed by EOG Resources Inc.(NYSE:EOG).

Prior to this announcement, the best performing well in the playwas EOG Resources Inc.'s Nile 22 State Com No. 1H well, which averaged3,938 Mcf of gas per day during its first full month of production,according to publicly available data. Parallel's current performance"type curve" anticipates the typical horizontal Wolfcamp well willexhibit an initial gross gas rate of approximately 2,100 Mcf of gasper day and a hyperbolic curve shape which yields approximately 2 BCFof gross gas reserves over a 17-year period. This "type curve," alongwith an assumed drill-and-complete cost of $2.2 million, a royaltyburden of 20%, and a realized wellhead price of $7.00 per Mcf ofnatural gas, yields a "typical well" undiscounted payout, undiscountednet income-to-investment ratio and rate-of-return of 0.95 years,4.47:1 and 100%, respectively.

Project Status

Parallel has budgeted $45.5 million for this project in 2006,which will be used to fund the drilling and completion of 24 Companyoperated and 24 non-operated horizontal wells, the installation ofpipelines and related infrastructure, and the acquisition ofadditional leasehold. As stated above, Parallel has recently increasedits leasehold position in its entire New Mexico Wolfcamp gas projectby approximately 17% to 165,000 gross (55,000 net) acres, with themajority of the increase being in Area 3.

Area 1 - Parallel currently holds approximately 63,000 gross(4,600 net) acres in this portion of the project, which is operated bythird parties, primarily by LCX Energy, LLC. Due to Parallel's acreageposition, the Company has the opportunity to participate with otheroperators through periodic acreage contributions into pooled units. Asof this press release, Parallel has ownership in 15 active producingwells, of which 11 are operated by LCX Energy and 4 are operated byEOG Resources. The Company also has 4 LCX Energy wells that are eitherawaiting completion or have completions in progress. One EOG Resourceswell and 2 LCX Energy wells are currently drilling, and Parallelanticipates commencing the drilling of its first horizontal Wolfcampwell with Devon as operator within the next few weeks. Parallel'sproportionate base working interest in Area 1 is 8.5%.

Area 2 - Parallel currently holds approximately 77,000 gross(35,000 net) acres in this Company operated area, with a proportionatebase working interest of approximately 85.0%. To date, Parallel hasre-entered and made a vertical Wolfcamp completion in the SeabiscuitNo. 1 well and has drilled the Affirmed No. 1, the Dash for Cash No. 1and the Seabiscuit No. 2 wells as Wolfcamp horizontals. All threehorizontal wells were drilled with laterals of approximately 4,000feet in length, were cased and cemented, and are now awaitingcompletion and pipeline connection.

Due to the lack of existing infrastructure in the area, Parallelwill install a treating plant and will build approximately nine milesof 16-inch pipeline. All plant and pipeline components have beenordered, with anticipated delivery beginning in early May. The currentschedule calls for pipeline and plant installation and completion ofthe first three horizontal wells in time to commence gas sales on orbefore July 1, 2006.

Parallel also currently holds five other fully approved drillingpermits and has one other permit in progress in Area 2. The Companyanticipates moving one drilling rig back into Area 2 early in thethird quarter of 2006.

Area 3 - As stated above, Parallel has recently increased itsleasehold position in Area 3 by approximately 46% to 25,000 gross(16,000 net) acres. The Company's proportionate base working interestin this operated area is approximately 85.0%. In addition to theinformation released above regarding the initial production of theBoxtop 1921-1 Federal No. 1 well and the drilling informationdiscussed on the Mara State No. 1 and the Match Box Federal No. 1wells, the Company currently holds five fully approved drillingpermits and has another ten permits currently in progress in Area 3.

Currently, the Company has two drilling rigs running in Area 3 andanticipates having a total of four rigs running in Areas 2 and 3 bythe first quarter of 2007.

Management Comments

Don Tiffin, Parallel's Chief Operating Officer, commented, "We arevery pleased with the way this play continues to develop and gainconfirmation of geology and reservoir performance with each passingmonth through additional production history, refinement of drillingand completion techniques, improving well results and the attractionof new operators."

Mr. Tiffin further commented, "More importantly, we are thrilledwith the results of the Boxtop 1921-1 Federal No. 1 well, which aresignificantly better than both the previous 'best well' in the playand our current 'type curve'. The combination of our large,strategically located acreage position and 'type curve' wellperformance provides for a potential drilling inventory in excess of300 drilling locations in the project, assuming 160-acre spacing."

In a final management comment, Larry C. Oldham, Parallel'sPresident and CEO, stated, "Based on the potential of our New MexicoWolfcamp horizontal gas project, we expect that it will rapidly becomethe Company's largest natural gas asset in terms of reserves andproduction."

The Company

Parallel Petroleum is an independent energy company headquarteredin Midland, Texas, engaged in the acquisition, exploration,development and production of oil and gas using 3-D seismic technologyand advanced drilling, completion and recovery techniques. Parallel'sprimary areas of operation are the Permian Basin of West Texas and NewMexico, North Texas Barnett Shale, Onshore Gulf Coast of South Texas,East Texas and Utah/Colorado. Additional information on ParallelPetroleum Corporation is available at http://www.plll.com.

This release contains forward-looking statements subject tovarious risks and uncertainties that could cause the Company's futureplans, objectives and performance to differ materially from those inthe forward-looking statements. Forward-looking statements can beidentified by the use of forward-looking terminology such as "may,""will," "expect," "intend," "plan," "subject to," "anticipate,""estimate," "continue," "present value," "future," "reserves","appears," "prospective," or other variations thereof or comparableterminology. Factors that could cause or contribute to suchdifferences could include, but are not limited to, those relating tothe results of exploratory drilling activity, the Company's growthstrategy, changes in oil and natural gas prices, operating risks,availability of drilling equipment, outstanding indebtedness,weaknesses in our internal controls, the inherent variability in earlyproduction tests, changes in interest rates, dependence on weatherconditions, seasonality, expansion and other activities ofcompetitors, changes in federal or state environmental laws and theadministration of such laws, and the general condition of the economyand its effect on the securities market. While we believe ourforward-looking statements are based upon reasonable assumptions,these are factors that are difficult to predict and that areinfluenced by economic and other conditions beyond our control.Investors are directed to consider such risks and other uncertaintiesdiscussed in documents filed by the Company with the Securities andExchange Commission.