Exhibit 10.6



                        PARALLEL PETROLEUM CORPORATION

                   NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN


    1.  Purpose of the Plan.    The purpose of the Parallel Petroleum
Corporation Non-employee Directors Stock Option Plan (the "Plan") is to
secure for Parallel Petroleum Corporation (the "Company") and its stockholders
the benefits of the incentives inherent in increased common stock ownership
by members of the Board of Directors (the "Board") of the Company who are not
employees of the Company ("Non-employee Directors") or any of its
subsidiaries and to provide a means whereby Non-employee Directors of the
Company may develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them
to remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders.
Accordingly, the Plan provides for granting to Non-employee Directors the
option ("Option") to purchase shares of common stock of the Company
("Stock"), as hereinafter set forth.  Options granted under the Plan to
Non-employee Directors are not intended to be incentive stock options within
the meaning of section 422 of the Internal Revenue Code of 1986, as amended.

     2. Administration.   The Plan shall be administered by the Board of
Directors of the Company (the "Board") or by a committee (the "Committee") of
two or more directors of the Company appointed by the Board.  If a Committee
is not appointed by the Board, the Board shall act as and be deemed to be the
Committee for all purposes of the Plan.  The Committee shall have sole
authority (within the limitations described herein) to select the
Non-employee Directors who are to be granted Options; to establish the number
of shares which may be issued to Non-employee Directors under each Option;
and to prescribe the form of the agreement embodying awards of Options.  The
Committee is authorized to interpret the Plan, to determine all questions
arising thereunder and to adopt such rules and regulations, consistent with
the provisions of the Plan, as it may deem advisable to carry out the Plan.
All decisions made by the Committee shall be final and conclusive.  No member
of the Board shall be liable for anything done or omitted to be done by such
member or by any other member of the Board in connection with the Plan,
except for such member's own willful misconduct or as expressly provided by
statute.

     3. Eligibility of Optionee.   Options may be granted only to directors who
are not employees of the Company or any parent or subsidiary corporation of
the Company at the time the Option is granted.  The adoption of this Plan
shall not be deemed to give any director any right to be granted an Option.
Options may be granted to the same Non-employee Director on more than one
occasion.

    4.  Shares Subject to the Plan.   The aggregate number of shares which may
be issued under Options granted under the Plan shall not exceed 500,000
shares of Stock.  Such shares may consist of authorized but unissued shares

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of Stock or previously issued shares of Stock reacquired by the Company.
Any of such shares which remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to be subject
to the Plan, but, until termination of the Plan, the Company shall at all
times make available sufficient number of shares to meet the requirements of
the Plan.  If any Option hereunder expires or terminates prior to its
exercise in full, the shares theretofore subject to such Option may again be
subject to an Option granted under the Plan.  The aggregate number of shares
which may be issued under the Plan shall be subject to adjustment in the
same manner as provided in Paragraph 7 hereof with respect to shares of
Stock subject to Options then outstanding.  Exercise of an Option in any
manner shall result in a decrease in the number of shares of Stock which may
thereafter be available, both for purposes of the Plan and for sale to any
one individual, by the number of shares as to which the Option is exercised.

    5.  Option Agreements; Terms and Conditions.   Each Option granted under the
Plan shall be evidenced by an agreement and shall contain such terms and
conditions, and may be exercisable for such periods, as the Committee shall
prescribe from time to time in accordance with this Plan, and shall comply
with the following terms and conditions:

    (a) The Option exercise price shall be the fair market value of the
Stock subject to the Option on the date the Option is granted.   For
all purposes under the Plan, the fair market of a share of Stock on a
particular date shall be equal to the average of the high and low
sales prices of the Stock on the date of grant as reported on the
Nasdaq National Market tier of The Nasdaq Stock Market ("NMS"), or on
the stock exchange composite tape if the Stock is traded on a
national stock exchange on that date, or if no prices are reported on
that date, on the last preceding date on which such prices of the
Stock are so reported.  If the Stock is not traded on the NMS or
other stock exchange on that date, but is otherwise traded over the
counter at the time a determination of its fair market value is
required to be made hereunder, its fair market value shall be deemed
to be equal to the average between the reported high and low or
closing bid and asked prices of the Stock on the most recent date on
which the Stock was publicly traded.  If the Stock is not publicly
traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be
made by the Committee in such manner as it deems appropriate.

    (b) The Option shall not be transferable otherwise than by will or the
laws of descent and distribution, and may be exercised only by the
Non-employee Director during the Non-employee Director's lifetime and
while the Non-employee Director remains a director of the Company,
except that:

        (i) If the Non-employee Director ceases to be a director of the
        Company because of disability, the Option may be exercised in
        full by the Non-employee Director (or the Non-employee Director's
        estate or the person who acquires the Option by will or the laws
        of descent and distribution or otherwise by reason of the death
        of the Non-employee Director) at any time during the period of
        one year following such termination;

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        (ii) If the Non-employee Director dies while he is a director of the
        Company, the Non-employee Director's estate, or the person who
        acquires the Option  by will or the laws of descent and distribution
        or otherwise by reason of the death of the Non-employee Director,
        may exercise the Option in full at any  time  during  the period of
        one year following the date of the Non-employee Director's death;
        and

        (iii) If the Non-employee Director ceases to be director of the Company
        for any reason other than as described in clause (i) or (ii) above,
        unless the Non-employee Director is removed for cause, the Option
        may be exercised by the Non-employee  Director at  any  time  during
        the period of three months following the date the Non-employee
        Director ceases to be a director of the Company, or by the
        Non-employee Director's estate (or the person who acquires the
        Option  by will  or the laws of descent and distribution or
        otherwise by reason of the death of  the Non-employee Director)
        during a period of one year following the Non-employee Director's
        death if the Non-employee Director dies during such three-month
        period, but in each case only as to the number of shares the
        Non-employee  Director  was entitled to purchase hereunder upon
        exercise of the Option as of the date the Non-employee Director
        ceases to be a director.

    (c)  The Option shall not be exercisable in any event after the expiration
    of ten years from the date of grant.

    (d)  The purchase price of shares as to which the Option is exercised shall
     be paid in full at the time of exercise (a) in cash, (b) by delivering
     to the Company shares of Stock having a fair market value equal to the
     purchase price, or (c) any combination of cash or Stock, as shall be
     established by the Committee.  Unless and until a certificate or
     certificates representing such shares shall have been issued by the
     Company to the Non-employee Director, the Non-employee Director (or the
     person permitted to exercise the Option in the event of Director's
     death) shall not be or have any of the rights or privileges of a
     stockholder of the Company with respect to shares acquirable upon an
     exercise of the Option.

    (e)  The terms and conditions of the respective Non-employee Director Stock
     Option agreements need not be identical.  

6. Term of Plan.   The Plan shall be effective upon the date of its approval
and adoption by the stockholders of the Company.  Except with respect to
Options then outstanding, if not sooner terminated under the provisions of
Paragraph 8, the Plan shall terminate upon and no further Options  shall be
granted after the expiration of ten years from the date of its adoption by
the Board.

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7. Recapitalization or Reorganization.       

    (a) The existence of the Plan and the Options granted hereunder shall not
    affect in any way the right or power of the Board or the stockholders
    of the Company to make or authorize any adjustment, recapitalization,
    reorganization or other change in the Company's capital structure or
    its business, any merger or consolidation of the Company, any issue
    of debt or equity securities ahead of or affecting the Stock or the
    rights thereof, the dissolution or liquidation of the Company or any
    sale, lease, exchange or other disposition of all or any part of its
    assets or business or any other corporate act or proceeding.

    (b) The shares with respect to which Options may be granted are shares of
    Stock as presently constituted, but if, and whenever, prior to the
    expiration of an Option theretofore granted, the Company shall effect
    a subdivision or consolidation of shares of Stock or the payment of a
    stock dividend on Stock without receipt of consideration by the
    Company, the number of shares of Stock with respect to which such
    Option may thereafter be exercised (i) in the event of an increase in
    the number of outstanding shares shall be proportionately increased,
    and the purchase price per share shall be proportionately reduced,
    and (ii) in the event of a reduction in the number of outstanding
    shares shall be proportionately reduced, and the purchase price per
    share shall be proportionately increased.

    (c) If the Company recapitalizes or otherwise changes its capital
    structure, thereafter upon any exercise of an Option theretofore
    granted the optionee shall be entitled to purchase under such Option,
    in lieu of the number of shares of Stock as to which such Option
    shall then be exercisable, the number and class of shares of stock
    and securities to which the optionee would have been entitled
    pursuant to the terms of the recapitalization if, immediately prior
    to such recapitalization, the optionee had been the holder of record
    of the number of shares of Stock as to which such Option is then
    exercisable.  If (i) the Company shall not be the surviving entity
    in any merger or consolidation (or survives only as a subsidiary of
    an entity other than a previously wholly-owned subsidiary of the
    Company), (ii) the Company sells, leases or exchanges or agrees to
    sell, lease or exchange all or substantially all of its assets to any
    other person or entity (other than a wholly-owned subsidiary of the
    Company), (iii) the Company is to be dissolved and liquidated, (iv)
    any person or entity, including a "group" as contemplated by Section
    13(d)(3) of the Securities Exchange Act of 1934, as amended,
    acquires or gains ownership or control (including, without
    limitation, power to vote) of more than 50% of the outstanding
    shares of Stock, or (v) as a result of or in connection with a
    contested election of directors, the persons who were directors of
    the Company before such election shall cease to constitute a
    majority of the Board (each such event is referred to herein as a
    "Corporate Change"), then upon the occurrence of any such Corporate
    Change, any outstanding Options held by Non-employee Directors shall
    become fully exercisable and upon any exercise of an Option
    theretofore granted the Non-employee Director shall be entitled to
    purchase under such Option, in lieu of the number of shares of Stock
    as to which such Option shall then be exercisable, the number and
    class of shares of stock or other securities or property to which
    the Non-employee Director would have been entitled pursuant to the
    terms of the Corporate Change if, immediately prior to such

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    Corporate Change, the Non-employee Director had been the holder of
    record of the number of shares of Stock as to which such Option is
    then exercisable.

    (d) Any adjustment provided for in Subparagraphs (b) or (c) above shall
    be subject to any required stockholder action.

    (e) Except as hereinbefore expressly provided, the issuance by the
    Company of shares of stock of any class or securities convertible
    into shares of stock of any class, for cash, property, labor or
    services, upon direct sale, upon the exercise of rights or warrants
    to subscribe therefor, or upon conversion of shares or obligations
    of the Company convertible into such shares or other securities, and
    in any case whether or not for fair value, shall not affect, and no
    adjustment by reason thereof shall be made with respect to, the
    number of shares of Stock subject to Options theretofore granted or
    the purchase price per share.

    8.  Amendment or Termination of the Plan.   The Board in its discretion may
terminate the Plan at any time with respect to any shares for which
Options have not theretofore been granted. The Board shall have the right
to alter or amend the Plan or any part thereof from time to time,
provided, that no change in any Option theretofore granted may be made
which would impair the rights of the optionee without the consent of such
optionee.

     9. Miscellaneous Provisions.    

    (a) Neither the Plan nor any action taken hereunder shall be construed
    as giving any Non-Employee Director any right to be retained in the
    service of the Company.

    (b) An optionee's rights and interest under the Plan may not be assigned
    or transferred in whole or in part either directly or by operation of
    law or otherwise (except in the event of an optionee's death or disability,
    by will or the laws of descent and distribution), including, but not by
    way of limitation, execution, levy, garnishment, attachment, pledge,
    bankruptcy, or in any other manner, and no such right or interest of any
    participant in the Plan shall be subject to any obligation or liability
    of such participant.

    (c) No shares of Stock shall be issued hereunder unless counsel for the
    Company shall be satisfied that such issuance will be in compliance with
    applicable Federal, state, and other securities laws and regulations.

    (d) It shall be a condition to the obligation of the Company to issue
    shares of Stock upon exercise of an Option, that the optionee (or any
    beneficiary or person entitled to act under or through Optionee as
    provided herein) pay to the Company, upon its demand, such amount as may
    be requested by the Company for the purpose of satisfying any liability
    to withhold Federal, state, local, or foreign income or other taxes.
    If the amount requested is not paid, the Company may refuse to issue
    shares of Stock.

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    (e) By accepting any Option under the Plan, each optionee and each person
    claiming under or through such person shall be conclusively deemed to
    have indicated his or her acceptance and ratification of, and consent to,
    any action taken under the Plan by the Company, the Board or the
    Committee.