Parallel Petroleum Corporation has exercised its preferential right and purchased the interests owned by Southwestern Energy Company in Parallel's operated Diamond M properties in Scurry County, Texas, effective May 1, 2008. The purchase price of approximately $35.5 million was financed with borrowings under the Company's revolving credit facility.

The additional interests acquired represent current daily production of approximately 298 net barrels of oil equivalent (BOE), and proved reserves of approximately 3.5 million BOE, of which 46% is proved developed producing (PDP) reserves. Please refer to the Table 1 below for important information relating to the proved reserves acquired by Parallel in this transaction.

The acquired interests consist of two components, including an 89% working interest in the Base production and reserves and a 22.3% working interest in the production and reserves above the Base. As used in Parallel's original trade agreement with Southwestern Energy, the Base production and reserves generally refers to and means future production and reserves defined by an established base production decline curve as of December 19, 2001.

Prior to this acquisition, Parallel did not own an interest in the Base production and reserves but owned a 65.7% working interest in the production and reserves above the Base. This acquisition resulted in an increase in the Company's current ownership in the Base production and reserves from zero to an approximate 89% working interest (77% net revenue interest), and an increase in the production and reserves above the Base from a 65.7% working interest to an 88% working interest (76% net revenue interest).

Tags: Diamond M, Parallel Petroleum Corporation, Southwestern Energy Company