Each one in plain English, with the numbers worked through for a shareholder.
1 Oct 2004asset acquisition disposition▲ GoodMajor
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.
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.
The board adopted an incentive and retention plan on September 24, 2004. It pays cash bonuses to officers and employees if Parallel is sold, merges, sells substantially all its assets or is liquidated, or a retention payment if someone acquires 60% or more of the voting power or the board changes control. The pool is the deal price per share minus $3.73, multiplied by 1,080,362 shares, so a $6.00 deal would give about $2.45m. The filing says Parallel considers such a transaction only 'possible' and has recorded no liability. It does not say a sale is planned.
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.
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.
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.
Parallel engaged BDO Seidman, LLP as its new independent accountant effective January 20, 2004, on the Audit Committee's recommendation. This fills the gap left when KPMG resigned in December 2003. The filing states Parallel had not consulted BDO on accounting or audit-opinion matters before the engagement.
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.
This amendment adds the audited revenue and direct expense figures for the Andrews County (Fullerton) properties Parallel bought on December 20, 2002, which the December 2002 filing said were still to come. Revenues from the properties were $13.48m in 2000, $9.63m in 2001 and $10.13m in 2002, and revenues less direct operating expenses were $11.14m, $6.99m and $7.41m. The deal terms repeat the original filing: $46.075m paid ($45.075m cash plus 454,545 shares), funded by the bank credit facility.
23 Dec 2002asset acquisition disposition● NeutralMajor
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.
22 May 2002asset acquisition disposition▲ GoodMajor
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.
22 Mar 2002asset acquisition disposition▲ GoodMajor
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.
Wes-Tex Drilling Company, L.P, Wes-Tex Holdings, LLC, Dewayne Chitwood, Executor of the Myrle Greathouse Estate reported a PARALLEL PETROLEUM CORP shareholding of 1,680,057 shares (8.20% of votes) in a periodic institutional filing.
On October 5, 2000 the board adopted a shareholder rights agreement (a 'poison pill'): each common share gets one right that becomes exercisable if a person or group acquires 15% or more of the stock or launches a tender offer for 15% or more. Holders other than the acquirer could then buy common stock worth twice the $26.00 per one-thousandth preferred share purchase price. The rights expire October 5, 2010 unless redeemed earlier at $0.001 per right. The board also amended the bylaws on advance notice of shareholder proposals, special meetings, written consents and director nominations.
