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Parallel Petroleum Announces Successful Natural Gas Discovery; Updates Operating Results
MIDLAND, Texas, Sept. 22 /PRNewswire/ -- Parallel Petroleum Corporation (Nasdaq: PLLL) today announced the current production rate of a natural gas discovery in the Yegua/Frio/Wilcox Gas Trend in Jackson County, Texas. The McInnis #2, Jackson County, Texas, was drilled to a total depth of 7,100 feet. The well was perforated from 6,848 to 6,852 feet in the Frio formation and is currently flowing at a rate of 1.75 mmcf of gas on a 12/64-inch choke with flowing tubing pressure of 2,260 psi. Based on the operator's current assessment, the production rate is expected to be increased to 5.0 mmcf per day during the next 30 days. Additional wells are expected to be drilled on this project. Parallel owns a 20.44% working interest (15.33% net revenue interest) in the well. The operator, privately held Sue-Ann Operating, LC, Beta Oil and Gas, Inc. (Nasdaq: BETA) and industry partners own the remaining interests.
Larry Oldham, president of Parallel added: "Our current exploration program has resulted in significant production increases. We exited second quarter 2000 with an average daily production rate of 10.3 mmcfe. Based on internal estimates, we expect fourth quarter production to reach 12.4 mmcfe per day, an increase of approximately 20%.
"Reviewing our current drilling inventory, we have 20 drill-ready Yegua and Frio prospects that will be drilled or spudded in the next six months, depending on weather and rig availability, with 15 prospects expected to be drilled or spudded before year-end. Our working interests in the prospects range from 10.0% to 40.0%, for an average working interest of approximately 25.0%. We expect the prospects to yield results similar to those of this year's previous drilling activity. For example, through September of this year, we spent approximately $1.0 million, net to our interest, to drill 19 wells. Of these 19 wells, 11 wells have been completed and are on production, two wells are waiting on pipeline connections and another well is shut in pending further evaluation. The remaining five wells were dry. Based on current production volumes and current oil and gas prices, we estimate that these successful wells will generate approximately $300,000 per month in cash flow, net to our interest, paying out our $1.0 million investment, including dry holes, in a little more than three months.
"Crude oil and natural gas prices continue to improve. The average price we received for our crude oil and natural gas production for the second quarter of 2000 was $27.13 per barrel and $3.02 per mcf, respectively. For October production, we expect to receive more than $30.00 per barrel and $5.00 per mcf. Supporting sustained high product prices is the WTI (West Texas Intermediate) NYMEX 12- month strip, which closed at $32.24 per barrel on September 20 and the Henry Hub NYMEX 12- month strip, which closed at $4.91 per mcf that same day. In our conference call on August 15, 2000, we indicated that we expected Parallel to generate net cash earnings of $2.0 million in third quarter 2000.
However, based on this year's successful drilling activity, the increase in production volumes and the rise in oil and gas prices since August, we believe third quarter actual results will exceed this estimate."
In other news, Oldham noted that Parallel had recently completed a Wilcox Regional Study that evaluated Wilcox sand potential in a trend extending across several of Parallel's projects in South Texas. "The initial indications of this study are impressive," commented Oldham. "We have identified at least 12 Wilcox prospects covering approximately 25,000 acres. Parallel's interest in these prospects ranges between 30% and 40%.
"It costs $3.0 million to $4.0 million to drill a Wilcox prospect and there is a higher degree of risk associated with depth and reservoir quality. However, the reserve potential is considerable. Based on our preliminary studies, we believe these prospects are attractive and present Parallel with new opportunities.
The company also reported that its affiliate First Permian, LLC commenced a $13.0 million infill developmental drilling program in August. First Permian is a Midland-based private oil and gas company of which Parallel currently owns 28.6%. This interest is expected to increase to 30.7%. First Permian's capital expenditure budget includes drilling approximately 70 infill wells and major production enhancement workover packages. To date, First Permian has drilled 16 infill wells and completed six major workovers. Initial results have been in line with expectations. First Permian currently has three drilling rigs working in the Permian Basin and several wells in various stages of completion.
Conference Call Information
Parallel management will hold a conference call to discuss this press release Monday, September 25, at 10:00 a.m. Central time. To participate in the call, please dial 719.457.2680 at least five minutes before the scheduled start time and ask for the Parallel Petroleum conference call, confirmation code 776097. A playback of the conference call will also be available on the company's web site (www.parallel-petro.com).
Parallel Petroleum Corporation is an independent energy company engaged in the exploration for and the acquisition and development of oil and gas properties using 3-D seismic technology.
In addition to historical information contained herein, this news release contains forward-looking statements subject to various risks and uncertainties that could cause the Company's actual results 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," "anticipate," "estimate," "continue," "present value," "future," "reserves" 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 Company's growth strategy, outstanding indebtedness, dependence on weather conditions, seasonality, expansion and other activities of competitors, prices of oil and gas, and the general condition of the economy and its effect on the securities market. While the Company believes its forward-looking statements are based upon reasonable assumptions, there are factors that are difficult to predict and that are influenced by economic and other conditions beyond the Company's control. Investors are directed to consider such risks and other uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission.
SOURCE Parallel Petroleum Corporation
CO: Parallel Petroleum Corporation; Sue-Ann Operating, LC; Beta Oil and Gas, Inc.
ST: Texas
IN: OIL
SU: DSC
09/22/2000 15:47 EDT prnewswire.com |
