Parallel Petroleum Announces Borrowing Base Reaffirmation

Parallel Petroleum entered into an amendment to its credit agreement with its bank lenders on April 30, 2009. The amendment reaffirmed Parallel's borrowing base of $230 million and changed the Funded Debt Ratio the Company is required to maintain. As amended, the ratio of Consolidated Funded Debt to Consolidated EBITDA may not exceed 5.00 to 1.00 during 2009, 4.25 to 1.00 during 2010, or 4.00 to 1.00 during 2011 and thereafter. The ratio is tested at the end of each fiscal quarter using the results of the twelve-month period immediately preceding the end of such fiscal quarter. In addition to establishing the borrowing base and modifying the Funded Debt Ratio, the definitions of "Base Rate Margin" and "Libor Margin" were also amended to increase the margin percentages by 0.25%.

For purposes of the amendment, Consolidated Funded Debt is generally defined as total outstanding liabilities for borrowed money and other interest-bearing liabilities, plus an amount equal to the amount that accounts payable exceed accounts receivable, and less an amount equal to the value of unpledged cash equivalent investments. Consolidated EBITDA is defined as consolidated earnings from continuing operations, before interest expenses, income taxes, depreciation, depletion, amortization, gains and losses on asset sales and other non-cash charges, plus payments received under hedging transactions and less payments made under hedging transactions.