Recent Completions

Since Parallel's May 10, 2006 operations update press release, 6 new wells have been placed on production in the Company's Barnett Shale gas project. Five of the new wells are operated by Dale Resources, LLC and the other new well is operated by Four Sevens. These six wells are now producing at a combined rate of approximately 31,600 gross Mcf of gas per day, or 5,266 gross BOE per day (1,385 BOE per day, net to Parallel). The current average daily production rate from each of these six wells ranges from a low of 900 gross Mcf to a high of 7,700 gross Mcf of gas per day.

On March 14, 2006, Parallel announced the results of two wells which were simultaneously fracture stimulated. Parallel now refers to this procedure as a "simo-frac". Two of the six new wells mentioned above employed this same procedure. As with the initial two "simo-frac'd" wells, these two new wells have also exhibited positive early results with an initial combined rate of approximately 15,000 gross Mcf of gas per day, or 2,500 gross BOE per day (784 BOE per day, net to Parallel).

Current Operations

Including the 6 new wells noted above, Parallel's Barnett Shale gas project now has a total of 14 wells producing at a combined rate of approximately 47,000 gross Mcf of gas per day, or 7,833 gross BOE per day (2,054 BOE per day, net to Parallel). The current average daily production rate from each of these 14 wells ranges from a low of 750 gross Mcf to a high of 7,700 gross Mcf of gas per day.

In addition, six other wells operated by Dale Resources have been drilled and are currently in various stages of pre-production operations. The next well to be drilled is expected to begin within the next thirty days.

Parallel's working interest in each of the 4 wells operated by Four Sevens is approximately 25.0% before payout and approximately 18.0% after payout. Parallel's working interest in each of the 16 wells operated by Dale Resources, LLC varies from a low of approximately 18.5% to a high of approximately 50.0% before payout, and varies from a low of approximately 18.5% to a high of approximately 37.0% after payout.

Other Information

Parallel's Barnett Shale gas project generated approximately 10% of the Company's first quarter 2006 daily production (527 BOE per day) and represented approximately 6% of its reserve value as of March 31, 2006.

Parallel's current leasehold position in the Barnett Shale gas project is approximately 11,700 gross (4,400 net) acres. The Company budgeted approximately $21.1 million for the project in 2006 for the drilling and completion of 18 new wells, pipeline construction and leasehold acquisition, exclusive of the $5.5 million acquisition of additional interests that was announced in the Company's press release dated March 30, 2006.

Management Comments

Larry C. Oldham, Parallel's President and CEO, stated, "We are very pleased with the continued success of our Barnett Shale drilling program. Based on our internal review of publicly available data, we believe the initial production rates of the majority of our wells are in the top 1% of all Barnett Shale wells, thus providing further evidence as to the quality of our acreage block."