PARALLEL PETROLEUM CORP

PARALLEL PETROLEUM CORP deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

PARALLEL PETROLEUM CORP deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

PARALLEL PETROLEUM CORP's exchange filed to remove a class of its securities from listing.

listing compliance notice

The Apollo merger was completed on November 25, 2009: the Apollo buyer merged into Parallel, which is now a wholly owned subsidiary of PLLL Holdings. Each remaining share was converted into the right to receive $3.15 in cash (except for shares held by Apollo-side entities or by holders who dissent and seek appraisal under Delaware law). Shareholders no longer have any interest in Parallel's future earnings, NASDAQ trading ends at the close on November 25, 2009, and Parallel asked NASDAQ to file the form removing the shares from listing and deregistering them. This resolves the open buyout, delisting and merger-closing threads.

listing compliance notice

Apollo's final report on its tender offer says the extra offering period ended October 29, 2009 with 36,390,826 shares (about 87.38% of the total) tendered, up from about 84.62% at the first expiry. All were accepted and paid for at $3.15. Apollo now has enough votes to approve the second-step merger on its own, so the remaining holders will be paid the same $3.15 (subject to appraisal rights) and the stock will leave NASDAQ. This continues the Apollo buyout, but the merger itself had not yet closed in this filing.

business combination

The Apollo tender offer closed its initial period at midnight on October 22, 2009 with about 35,244,824 shares tendered (about 84.62% of outstanding, including about 802,359 under guaranteed delivery). Apollo's buyer accepted all of them for payment at $3.15. A subsequent offering period runs to 5:00 p.m. October 29, 2009 at the same price, with no withdrawal rights. After it, the remaining shares are to be converted into $3.15 cash in a merger (subject to appraisal rights), and Parallel would become a wholly owned Apollo subsidiary and leave NASDAQ. This meets the majority minimum (20,823,223 shares) set earlier. The merger itself has not yet closed in this filing, so it is not yet final for holders who did not tender.

business combination

Parallel formally reported two things from October 13, 2009: Amendment No. 1 to the Apollo merger agreement (termination fee cut from $5.5 million to $4.0 million plus up to $1.0 million of expenses; tail period twelve to nine months), and a memorandum of understanding to settle the shareholder lawsuits (Delaware consolidated action plus the Midland and Harris County Texas suits). The settlement includes added disclosure in the 14D-9, dismissal of claims, a general release and court approval; no admission of wrongdoing. It moves the lawsuit thread toward resolution, though final court approval is still needed.

material agreement

Apollo's side disclosed the same fee reduction ($5.5 million to $4.0 million plus up to $1.0 million of expenses; tail period twelve to nine months). It also reported two more Delaware suits (Bernstein, Oct 1; Harris, Oct 2). All five suits, the three Delaware ones now consolidated before Vice Chancellor Laster plus the Texas ones, were covered by a settlement Memorandum of Understanding signed October 13. The settlement requires fee cut, added disclosure and dismissal of claims, and is subject to class certification and court approval. This resolves the lawsuits thread only if the courts approve; the offer price is unchanged.

business combination

Parallel amended its response to the Apollo tender offer. On October 13, 2009 the termination fee Parallel could owe was cut from $5.5 million to $4.0 million plus up to $1.0 million of Apollo's expenses, and the tail period for that fee was cut from twelve to nine months. The filing also adds background on the sale process: on September 9 Apollo offered $2.80 per share and a strategic bidder, 'Company C', offered for the assets (implied about $0.80 per share). On September 11 Apollo raised its offer to $3.15, called its best and final, against Company C's revised implied price of about $1.28. The board judged Apollo's offer clearly superior. Executives are to get five-year employment terms with Apollo, and Oldham has agreed to reinvest 65% of his option proceeds in an Apollo affiliate. The $3.15 price is unchanged. The forecasts section is cut off in the text.

business combination

Apollo's vehicles (PLLL Holdings and PLLL Acquisition Co.) formally launched the tender offer on September 24, 2009, as Parallel had said they would. They are offering $3.15 cash per share for all shares, valued at $131,767,832 for fee purposes (41,646,445 shares plus 519,200 shares under in-the-money options). The offer is not subject to a financing condition. This filing mostly points to the Offer to Purchase for the details, so it adds little beyond launching the offer.

business combination

Parallel's board filed its formal response to Apollo's tender offer, which launched September 24, 2009 at $3.15 cash per share (the price announced on September 15). The offer is run by PLLL Acquisition Co., it first expires at the end of October 22, 2009, and it needs 20,823,223 of the 41,646,445 shares outstanding to be tendered (a majority). A second-step merger would then convert any remaining shares into the same $3.15, except for holders who properly use Delaware appraisal rights. The filing also notes a June 30, 2009 confidentiality agreement with Apollo Management and that some officers and directors have interests that differ from other shareholders'. The board's recommendation itself falls in the truncated part of the text, so it is not stated here.

business combination

On September 15, 2009 Parallel signed a merger agreement with PLLL Holdings and PLLL Acquisition Co. (Apollo affiliates). A cash tender offer at $3.15 per share is to begin within seven business days, followed by a merger leaving Parallel a wholly owned subsidiary. The offer needs a majority of shares tendered; Parallel may owe a $5.5 million termination fee if it accepts a superior proposal. The filing also reports a September 14 amendment to the 2000 rights plan so the deal does not trigger it. The $3.15 price compares with $18.50 in the December 2007 offering.

business combination

Apollo's acquisition vehicles (PLLL Holdings, LLC and PLLL Acquisition Co.) filed a pre-launch notice of a planned tender offer for all Parallel common shares at $3.15 cash per share, about $132 million in total, in a deal valued at about $483 million including about $351 million of net debt. The offer is expected to start by September 24, 2009; a second-step merger would then pay the same price to remaining holders. Apollo-managed funds have committed $283.2 million of equity and there is no financing condition. Parallel will also offer to repurchase its $150 million 10.25% Senior Notes at 101% of face value.

business combination

Parallel filed a communication announcing a definitive agreement for an affiliate of Apollo Global Management to acquire it, with the joint press release of September 15, 2009 attached as an exhibit. This begins the sale process; the substantive terms are in the same-day filings, and the exhibit text here is not reproduced.

business combination

Production held up in late 2008 at 7,641 barrels of oil equivalent a day, but reserves did not: proved reserves fell 13% to 33.2 million barrels of oil equivalent after an 8.2 million barrel downward revision driven purely by the price collapse, oil having gone from $96 to $45. The value of those reserves halved, to about $308 million.

resource reserve update

On June 26, 2008 Parallel used its preferential right to buy Southwestern Energy subsidiary Diamond M Production's interests in the Diamond M properties in Scurry County, Texas, for about $35.5 million (effective May 1, 2008). This lifts its working interest in the base production from zero to about 89% and in production above the base from 65.7% to 88%, adding about 298 net BOE per day and about 3.5 million BOE of proved reserves. It was paid entirely with borrowings under the new May 2008 credit agreement, and the properties become additional collateral.

asset acquisition disposition

On May 16, 2008 Parallel signed a Fourth Amended and Restated Credit Agreement with Citibank, BNP Paribas and five other banks. It replaces the Third Amended agreement (Fourth Amendment of Nov 2007) with a borrowing base of $230.0 million (up from $200 million), a cap of $600.0 million, $100 million drawn at May 21, 2008, and a maturity of December 31, 2013. Interest is LIBOR plus 2.00%-2.50% with a 4.75% floor, a $638,041.85 facility fee was paid, and covenants include a maximum debt-to-EBITDA ratio of 4.00 to 1.00.

debt financing

On December 3, 2007 Parallel agreed to sell 3,000,000 common shares to Jefferies & Company at an initial public offering price of $18.50, expected to close December 6, 2007, under an existing shelf registration. This increases the number of shares outstanding; the filing does not say how the proceeds will be used.

material agreement

Parallel Petroleum sold $150 million of seven-year unsecured notes at a 10.25% coupon. That rate is what the bond market charged a small West Texas producer for money that could not be called back by a bank.

debt financing

Chesapeake Energy took over as operator of Parallel's West Fork Barnett Shale project after buying the roughly 61% working interest previously held by Dale Gas Partners. Parallel keeps its stake but the drilling pace is now set by a company many times its size.

joint venture update

On August 10, 2006 Parallel agreed to sell 2,500,000 new common shares through Jefferies & Company at $24.20 per share to the underwriter, with an initial public price of $25.25, under an existing shelf registration. This adds shares for existing holders to share the company with; the filing does not state what the proceeds will be used for. It follows the 5,000,000 shares sold in February 2005 at $5.27.

material agreement

On March 29, 2006 Parallel bought extra interests in its Barnett Shale gas project in Tarrant County, Texas from five unaffiliated sellers for about $5.5 million cash, drawn on its senior revolver. Its working interest in sixteen drilled wells rose from about 28.0% to about 36.4%. It also has an option, not an obligation, to pay up to $20.4 million of future drilling costs for the sellers to earn half of their undeveloped leasehold; the properties are pledged to both lenders.

asset acquisition disposition

On March 8, 2006 Parallel concluded that its 2004 annual and several 2004-2005 quarterly financial statements should not be relied on, because its paperwork for treating certain oil, gas and interest rate hedges as cash flow hedges was insufficient for deals made after June 30, 2004. Restated net income is lower: 2004 falls from $5.585 million to $2.271 million, and the March 2005 quarter becomes a $10.704 million loss versus a $550,000 loss reported earlier; retained earnings at September 30, 2005 fall by about $22.8 million. Parallel says covenants will not be breached but has asked lenders for waivers, and a default would occur if the required financial statements are not given to lenders by March 31, 2006 or a waiver is obtained. This is a new problem for the credit facilities set up in late 2005.

financial restatement

On January 12, 2006 Parallel closed the second and final part of the Lynx purchase for $23.4 million, covering about 3.5 million barrels of oil equivalent of proved reserves; the first part closed November 15, 2005 for $20.8 million. Parallel now operates the properties with a 90.0% working interest and 67.5% net revenue interest, funded from its senior revolving credit facility, and the properties are pledged as collateral for both the senior and second-lien loans. This completes the Lynx deal signed in October 2005 and ahead of the January 31, 2006 date that would otherwise have cut the borrowing base by $5.6 million (inference).

asset acquisition disposition

On December 23, 2005 Parallel replaced its credit agreement with a Third Amended and Restated one adding four lenders (Compass, Comerica, Bank of Scotland, Fortis). It allows borrowing up to the lesser of $350 million or the borrowing base, now $125 million after the Lynx purchase, and $50 million was outstanding at December 30. The borrowing base drops by $5.6 million if the remaining Lynx properties are not acquired by January 31, 2006. The facility matures October 31, 2010 with margins of 2.00%-2.50% over LIBOR, a 5.00% minimum all-in rate and a $187,500 facility fee, and defaults on the second-lien loan trigger defaults here. This lifts the October 2005 borrowing base of $100 million and supports the Lynx acquisition.

debt financing

On November 15, 2005 Parallel closed the first part of the Lynx purchase for $20.8 million, covering about 2.9 million of the 6.4 million barrels of oil equivalent of proved reserves if everything closes, and became operator. To fund it, Parallel took a new $50 million second-lien term loan from BNP Paribas and Citibank Texas, due November 15, 2010 at LIBOR plus 4.50%, with a $750,000 arrangement fee. About $25.7 million repaid revolver debt and $24.3 million is for the remaining Lynx properties. The loan ranks behind the bank credit facility, is secured by second liens, and a default on it triggers a default on the senior facility. A fourth amendment to the credit agreement permitted this. The Lynx deal moves from signed to partly completed, and Parallel's debt rises.

asset acquisition disposition

On October 14, 2005 Parallel extended its bank credit facility to October 31, 2010, raised the borrowing base from $90 million to $100 million (next redetermination about April 1, 2006) and cut the interest margin. It also agreed to buy oil and gas properties in Andrews and Gaines Counties, Texas from Lynx Production and nine other sellers for $44.5 million, with Parallel taking a 90% working interest and 67.5% net revenue interest, and becoming operator. Closings run November 15, 2005 to January 15, 2006, funded from the revolver, with the properties pledged as collateral. Parallel also spent $1.5 million on oil price collars (floor $55) covering the purchase. This continues the 2004-05 Andrews/Gaines acquisition strategy and its debt funding.

material agreement

All holders of the 950,000 outstanding 6% Convertible Preferred shares chose to convert instead of being redeemed for cash on June 6, 2005. They receive about 2.8571 common shares each, around 2,714,280 shares in total, plus $270,750 of accrued dividends. The preferred is no longer outstanding, and existing common holders are diluted by the new shares.

capital raising announcement

On April 5, 2005 Parallel and its lenders amended the credit agreement again. The borrowing base is set at $90 million, with the next redetermination around October 1, 2005. The interest margin is reset to 2.25%-2.75% depending on usage, and the cap on certain other investments in 2005 is raised to $4.25 million. This follows the 2004 acquisitions and the earlier December covenant amendment.

material agreement

On February 3, 2005 Parallel agreed to sell 5,000,000 new common shares through underwriters Jefferies and Sterne Agee at $4.9538 per share to the underwriters, with an initial public price of $5.27. The underwriters have an option on 750,000 more shares. This adds to the share count and so dilutes existing holders. The filing does not say how the proceeds will be used.

material agreement

Parallel and its lenders loosened the debt-to-EBITDA limit in the September 2004 credit agreement from 3.00 to 3.70 for the quarters through the end of 2005, then 3.60 during 2006 and 3.50 from 2007. The filing gives no reason for the change. (Inference: the limit was relaxed after the debt-funded acquisitions of fall 2004, but the filing does not say so.) The lenders did not waive any default, and the filing says no default exists.

material agreement

On November 30, 2004 Parallel agreed to buy the remaining interests in the same Andrews and Gaines County properties bought from Caprock and Bunn, from 27 unaffiliated working interest owners, for $5,661,108 before adjustments. If all close, its average working interest rises from about 56.6% to about 80.55%. The interests carry an estimated 909,000 barrels of oil equivalent of proved reserves and about 90 barrels of oil equivalent a day. Closings are due by December 31, 2004, except two by January 31, 2005, subject to conditions. The price is to be funded from the revolver, with the properties pledged as collateral. This extends the Caprock purchase and adds to the debt-funded acquisitions.

material agreement

Parallel completed the Caprock and Bunn purchases on October 14, 2004, the day before the scheduled closing. Net prices were about $12.87 million for Caprock's properties and about $746,000 for Bunn's, funded from the revolver and pledged as collateral. The properties in Andrews and Gaines Counties, Texas cover about 3,109 net acres and 39 net producing wells, with estimated proved reserves of 2.0 million barrels of oil equivalent and about 200 barrels of oil equivalent a day of production. Parallel's average working interest is 56.6%, and it becomes operator. This resolves the Caprock deal agreed on September 16.

asset acquisition disposition

On October 8, 2004 Parallel bought more Fullerton Field interests in Andrews County, Texas from Kaiser-Francis Oil Company for a net price of about $5.63 million, funded from the revolver and pledged as collateral. The deal covers the Lineberry and Grogan leases and lifts Parallel's average working interest in them from 35.3% to 76.5%. It adds about 100 barrels of oil equivalent a day, unhedged, and an estimated 540,000 barrels of oil equivalent of proved reserves. This is a further debt-funded addition to the Fullerton position built since the 2002 acquisition.

material agreement

Parallel completed the Chevron purchase of Fullerton Field properties in Andrews County, Texas on September 27, 2004. The price was $16,080,470 before adjustments and $15,245,592 after, funded from the revolving credit facility, and the properties were pledged as collateral. Parallel's working interest in these properties rises from 64.125% to 89.125%. The added interests carry an estimated 1.91 million barrels of oil equivalent of proved reserves and about 260 barrels of oil equivalent a day of production. This closes the Chevron deal agreed on September 16 and adds to the debt taken on.

asset acquisition disposition

On September 27, 2004 Parallel signed a Second Amended and Restated Credit Agreement with First American Bank, Citibank, BNP Paribas and Western National Bank, replacing the earlier revolver. The borrowing base is $72 million (up from $50 million), with $55 million drawn, and the maturity moves out to December 20, 2008 (from 2006). The facility is secured on substantially all oil and gas properties and has a $300,000 facility fee. A separate commitment letter makes a further $20.5 million available for the Caprock purchase and more Fullerton interests if they are completed by October 31, 2004. The borrowing base would drop by $10 million on April 1, 2005 if all the Caprock properties are acquired. This completes the amendment flagged in the earlier acquisition filings and means the acquisitions are funded with more debt. A change of control is listed as an event of default.

debt financing

On September 16, 2004 Parallel agreed to buy producing oil and gas properties in Andrews and Gaines Counties, Texas from Caprock Oil & Gas for $13,146,221, plus $767,933 for related interests held by Bradley W. Bunn, a Caprock affiliate and principal. The deals cover about 3,109 net acres and 39 net producing wells, and Parallel will become operator. Closing was scheduled for October 15, 2004, and the filing says the purchase will be financed from the bank revolver and the properties pledged as extra collateral, with the credit facility being amended to allow it. This is a second debt-funded acquisition announced the same day as the Chevron purchase.

material agreement

On September 16, 2004 Parallel agreed to buy more producing properties in the Fullerton Field in Andrews County from Chevron for $16,080,470 before adjustments. This adds to the Fullerton properties it bought in 2002, where it already owns a 64.125% working interest. Parallel exercised a preferential right to purchase after Chevron agreed to sell to a third party. Closing was scheduled on or before September 27, 2004. The filing says the price will be drawn from the existing bank revolver, the properties will be pledged as extra collateral, and the lenders are amending the credit facility to allow this.

material agreement

Parallel reported that proved reserves rose about 15% to 14.8 million barrels of oil equivalent at December 31, 2003, from 12.9 million a year earlier, with 2003 production of about 1.2 million. The company attributes the increase to refracs on the Fullerton properties bought in December 2002, results at its Lion Diamond M project, and East Texas and South Texas gas drilling. The estimated value of proved reserves rose about 20% to roughly $148m from $123m. Management plans about $50m of capital spending over three years (about $17m in 2004), which it expects to fund from operating cash flow and which excludes acquisitions.

drilling progress report

Auditor KPMG LLP ended its relationship with Parallel on December 2, 2003, resigning because of an independence issue tied to retirement benefits of a former KPMG partner who is also a Parallel director. KPMG's reports for 2001 and 2002 were clean, and the filing states there were no disagreements with Parallel. Parallel now needs a new auditor.

auditor change

On December 20, 2002 Parallel bought 95% of the interest owned by the sellers (JMC Exploration and Arkoma Star) in producing San Andres oil properties in Andrews County, Texas, for $46.075 million: $45.075 million cash and 454,545 Parallel shares valued at $2.20 each. The properties produce about 1,150 barrels of oil equivalent per day net to Parallel, and Parallel's working interest ranges from 22% to 85%. Texland Petroleum bought the other 5% and is named operator, with Parallel co-managing. The cash was borrowed under a revolving credit facility with First American Bank, Western National Bank and BNP Paribas, with a $50 million borrowing base, monthly commitment reductions starting August 31, 2003 and principal due December 20, 2006, secured by substantially all of Parallel's oil and gas properties. This is a major new acquisition after the 2002 First Permian sale, funded by new debt.

asset acquisition disposition

The First Permian sale to Energen closed on April 8, 2002, completing the deal announced in March. Parallel's share, net of its share of First Permian's liabilities, was about $31.6 million, including $6.05 million in cash and 933,589 Energen shares worth $25.58 million at $27.40 per share. The pro forma statements show a one-off gain on the sale and total equity rising from $25.4 million to $44.5 million. Parallel had not decided how to use the cash; it listed working capital, capital spending or paying down bank debt as possibilities.

asset acquisition disposition

Parallel owns 30.675% of First Permian, L.L.C., the Permian Basin vehicle formed in 1999 with three other companies to buy Fina's properties for $96.125 million. On March 7, 2002 First Permian agreed to sell all its oil and gas properties to Energen Resources for $120 million cash plus about $70 million of Energen stock. Parallel estimates its share of net proceeds at about $29 million. Closing was expected in early April 2002 and was subject to Energen's due diligence and customary conditions.

asset acquisition disposition