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John S. Herold
Pacesetters Energy Conference
Thursday, September 28, 2006
8:15 a.m. EST

The Icebox #1 Well in Area 3 – "Box Area“, New Mexico 1

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Remember…It's a Marathon,
title style Not a Sprint!

June Sept
Selected Information 2002 2006 % Change

Stock Price per Share ($) $2.65 $20.00 655%

Outstanding Shares (MM) 20.7 37.5 81%

Market Cap ($MM) $55 $750 1,264%

Enterprise Value ($MM) $67 $864(1) 1,190%

Institutional Ownership (%) 5% 80% 1,500%

Reserves (Mmboe) 3(2) 30(3) 900%

Avg. Daily Production (Boepd) 1,481(4) 6,432(5) 334%

Number of Employees 6 41 583%

(1) Assumes $114 MM of proforma debt as of June 2006

(2) As of Dec. 2001 (3) As June 2006
(4) 2nd Quarter 2002 (5) 2nd Quarter 2006
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 Click toQuarter
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2006title
Results
style

548%

272%

179%

75%
19% 29%

Proved Proved Production

Net Cash Production Stock Reserve Reserve Replacement
Flow Price Volumes Value
2Q 2006 vs 2Q 2005 6 Months 6-06 vs Year End 20054
 5Click
YeartoProduction
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titleProved
style Reserve Growth
2001-2005

30 3.0
"Exploration" "Acquire & Exploit" CAGR
Strategy Strategy 67%
25 2.5

20 2.0
CAGR
22%
MMBOE MMBOE
15 1.5

10 1.0

5 0.5

0 0.0
2001 2002 2003 2004 2005

Year End Proved Rese rve Volumes Ye ar End Production

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 Quarterly
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edit Daily title
Master Production
style Volumes
BOE per Day

7,000
6,432
%
6,000 25
6% 5,146 25%
4% 4,873
5,000 75% 4,691
% 10% 13%
27 10%
4,000 3,681
3%
3,000
62% 59% 60% 54%
68%
2,000

1,000
29% 28% 31% 27% 21%
0
2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006
Resource Projects Permian Basin Gulf Coast
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Areas ofedit
Operations
Master title style

Utah / Colorado Project

Uinta Basin
Acquired June 2002

New Mexico Gas Project Barnett Shale Gas Project

Eddy & Chaves Counties Tarrant County
Started Summer 2002 Started Feb. 2003

Carm-Ann / N. Means Queen

Andrews & Gaines Counties Cotton Valley Project
Acquired 4Q 2004 & 1Q 2005 Leon & Freestone Counties
Started Dec. 2003
Harris San Andres
Andrews & Gaines Counties
Acquired 4Q 2005 & 1Q 2006
Cook Mountain Gas
Fullerton San Andres
Liberty County
Andrews County Acquired Dec. 2001
Acquired Dec. 2002

Diamond M Field
Yegua / Frio / Wilcox Gas
Scurry County
Agreement Dec. 2001 Jackson & Wharton Counties
Acquired Nov. 1994

Onshore Gulf Coast – Gas Projects Resource Plays

Permian Basin – Oil Projects Exploration Projects

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Summary of Well Operations (1)
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Since January 1, 2006

Number of Wells Estimated Initial

Well Operations Gross Net Net BOEPD (2) (3)

Completed:
Producing 53 25.58 4,932
Workovers - Producing 5 3.64 328
Shut-in 1 0.85 64
Total 59 30.07 5,324

Work In Progress:
Completing 15 8.17 N/A
Workovers - Completing 1 0.66 N/A
Awaiting Completion 12 6.18 N/A
Drilling 7 3.35 N/A
Total 35 18.36 N/A

GRAND TOTAL 94 48.43 5,324

(1)
Please refer to the Company's operations update press releases dated
March 14, 2006, May 10, 2006 and August 9, 2006 for detailed
information pertaining to well operations on certain properties that
contributed to the summary well operations data included in this table.
(2)
The estimated initial net equivalent barrels of oil per day (BOEPD)
represents an initial test rate of the well or wells and is not intended to
represent a sustained or stabilized producing rate.
(3)
The estimated net BOEPD is calculated based upon the conversion of
6 Mcf of natural gas being equal to 1 barrel of oil.
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 Estimated Initial Net BOEPD by Area (1)
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Since January 1, 2006

(1) (1)
Jan. 1, 2006 to May 10, 2006 May 10 2006 to Aug 1, 2006
Number of Wells Estimated Initial Number of Wells Estimated Initial
Area Gross Net Net BOEPD (2) (3) Gross Net Net BOEPD (2) (3)
Resource Projects
Barnett Shale 3 0.86 663 8 2.61 1,914
Wolfcamp 11 2.16 733 4 0.74 95
Permian Basin of West Texas
Carm-Ann 12 9.90 576 - - -
Harris 1 0.90 44 8 7.20 462
Diamond M Canyon Reef 4 2.64 275 2 1.32 218
Other Permian Basin 1 1.00 48 - - -
Onshore Gulf Coast - S.Texas
Yegua/Frio/Wilcox 5 0.74 296 - - -
Total 37 18.20 2,635 22 11.87 2,689

(1)
Please refer to the Company's operations update press releases dated March 14, 2006, May 10, 2006 and
August 9, 2006 for detailed information pertaining to well operations on certain properties that contributed to
the summary well operations data included in this table.
(2)
The estimated initial net equivalent barrels of oil per day (BOEPD) represents an initial test rate of the well or
wells and is not intended to represent a sustained or stabilized producing rate.
(3)
The estimated net BOEPD is calculated based upon the conversion of 6 Mcf of natural gas being equal to 1
barrel of oil.

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 Carm-Ann
Click to editSan Andres
Master title style
Historical Performance

BOEPD

1,400
11 of 14 wells
Acquisition
Oct. 2004 on production
1,200
Began 14 Well
Drilling Program
1,000

800 Began 16 Well

Drilling Program

600

400 PDP Reserve

Development

200 Extra
p olate
d Base
Decl
in e
0
3 4 4 4 4 4 4 5 5 5 5 6 6
n -03 r-03 ay-0 l-03 p-03 ov-0 n-0 ar-0 ay-0 l-04 p-0 v-0 - 05 ar-0 ay-0 l-05 p-0 v-0 -06 ar-0 ay-0
a a J u e a u e o n u e o n
J M M S N J M M J S N Ja M M J S N Ja M M
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 Carm-Ann
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Well Economics
title style
Based on 27 Wells Completed to Date

ROR Net / Investment

100% 10 Median Well (8/8ths)
100% 100%
90% 9 Initial Rate (Boepd) 67
Reserves (MBoe) 87.3
80% 8
Drilling & Comp.($M) 574
70% 7
6.4 Future Net Rev. ($M) (1) $3,636
60% 6
54% PV-10 ($M) (1) $1,905
50% 5.7 5
5.2 Prices:

40% 4 Oil (per Bbl) (2) $61.72

Gas (per Mcf)(2) $6.37
30% 3 (1) Before Capex
Break Even (2) NYMEX strip less $6.11
20% 2 (3) NYMEX strip less $1.00

10% 1 Potential Locations (8/8ths ) 80

(assumes 10-acre spacing)
0% 0 PLLL Average Ownership:
100% 80% 50% 20% 0% Working Interest 80%
Net Revenue Interest 70%
Probability Distribution

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 Barnett
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North Texas

West Fork Pipeline System – Fort Worth, Texas

15 miles completed as of 8/06
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 Parallel's North Texas Barnett
Click to edit Master title style Shale
Historical Producing Well Performance – 2005 Wells

MCFGPD

10,000
Gateway #1H
Brentwood A-#1H
9,000
Carter #1H
8,000 Parrot #1
Parrot-Allied #2H
7,000 Current Type Curve

6,000

5,000

4,000

3,000

2,000

1,000

0
1 2 3 4 5 6 7 8 9 10 11 12 13
Months
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 North Texas Barnetttitle
Shale
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Sequential Adjacent Well Frac Illustration

Gas Production To Sales Pipeline

Fracture
Sequence Order
8
7
≈ 1,200'
6
5

4
≈ 3,800'

3 Bird's Eye View

≈ 4,200'

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 Parallel's North Texas Barnett
Click to edit Master title style Shale
Simo-Frac'd Producing Well Performance

MCFGPD

10,000
Gateway #2H (Simo)
9,000
Gateway #3H (Simo)

8,000 Bahan #1H (Simo)

TRWD #1H (Simo)

7,000
Current Type Curve
6,000

5,000

4,000

3,000

2,000

1,000

0
1 2 3 4 5 6 7 8 9 10 11 12
Months
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 Parallel's North Texas Barnett
Click to edit Master title style Shale
Two Adjacent, Simo-Frac'd Wells

Gateway #3H Gateway #2H

02/06 02/06 First Production
4.36 Mmcfg 2.67 Mmcfg Current Daily Rate
1.05 Bcfg .67 Bcfg Cum. Gross Prod.

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 Barnett
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Based on 18 Wells Completed to Date

ROR Net / Investment

100% 10
100% 100% Median Well (8/8ths)
90% 9 Initial Rate (Mcfpd) 3,925

80% 8 Reserves (Mmcf) 3,650

7.34 Drilling & Comp.($M) $2,600

70% 7
Future Net Rev. ($M) (1) $9,608
60% 6
PV-10 ($M) (1) $7,750
50% 5 Price:
40% 4 Gas (per Mcf)(3) $6.52
3.7 (1) Before Capex
30% Break Even 3 (2) NYMEX strip less $1.60

20% 2
1.28
Potential Locations (8/8ths ) 265
10% 1 (assumes 50-acre spacing)
7%
0% 0 PLLL Average Ownership:
Working Interest 37%
100% 75% 50% 25% 0% Net Revenue Interest 26%
Probability Distribution

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Wolfcamp Overview
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New Mexico

Area 2 – Racehorse Area

Pipeline became operational during September 2006

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Wolfcamp
titleGas
style
Project Map

Wolfcamp Gas
Play
as defined by Parallel

New
Mexico

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 Area
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Evolution
Masteroftitle
Completions
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Emerging Resource Gas Play – New Mexico Wolfcamp

MCFGPD

5,000
Nile #1 Recoveries at 6 months
4,500 Horizontal - Frac 420 MMcfg
559 MMcfg in 12 Months 315 MMcfg
4,000 137 MMcfg

3,500
Thames #1
3,000
Horizontal - Acid
582 MMcfg in 20 Months
2,500

2,000
Current Type Curve
1,500

1,000

500
Best Vertical
782 MMcfg in 16+ Years
0
1 2 3 4 5 6 7 8 9 10 11 12
Months

Approximate payout (340 MMcfg) @ $7.00 per Mcfg

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 2006 Compared to Estimated 1 st Quarter 2007
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Capital Investment Budget

Revised Preliminary CAPEX Budget

CAPEX Budget 1Q 2007
2006 # of Wells
Area $MM % Gross Net $MM %

Resource Projects $95.4 60% 30.0 12.8 $32.8 80%

Permian Basin of West Texas $57.5 36% 16.0 12.8 $8.0 19%

Onshore Gulf Coast - S. Texas $1.9 1% - - $0.0 0%

Other Projects $5.0 3% 1.0 1.0 $0.6 1%

Total $159.8 100% 47.0 26.6 $41.4 100%

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 Click
It's a Marathon…Not
to edit Master title
a Sprint
style

$60 MM Common Stock Offering

August 16, 2006

Added to Russell 2000 Index

June 24, 2005

$28 MM Common Stock Offering

February 9, 2005

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Click to edit Master
Forward-Looking Statements
title style

Some statements contained in this presentation are "forward-

looking statements". All statements other than statements of
historical facts included in this report, including, without
limitation, statements regarding planned capital expenditures,
the availability of capital resources to fund capital expenditures,
estimates of proved reserves, our financial position, business
strategy and other plans and objectives for future operations,
are forward-looking statements. You can identify forward-
looking statements by the use of forward-looking terminology
like "may," "will," "expect," "intend," "anticipate," "estimate,"
"continue," "present value," "future" or "reserves" or other
variations or comparable terminology. We believe the
assumptions and expectations reflected in these forward-
looking statements are reasonable. However, we cannot give
any assurance that our expectations will prove to be correct or
that we will be able to take any actions that are presently
planned. All of these statements involve assumptions of future
events and risks and uncertainties. Risks and uncertainties
associated with forward-looking statements include, but are not
limited to: fluctuations in prices of oil and gas; future capital
requirements and availability of financing; geological
concentration of our reserves; risks associated with the drilling
of wells; competition; general economic conditions;
governmental regulations; potential defaults in the payment of
amounts owed to us by purchasers of our production and
counterparties to our hedging contracts; and risks of hedging
activities.
For these and other reasons, actual results may differ materially
from those projected or implied. We caution you against
putting undue reliance on forward-looking statements or
projecting any future results based on such statements.
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