Exhibit 10.23**GUARANTY**     **THIS GUARANTY**(this “Guaranty”) is made as of the 23rd day of December, 2005, by **PARALLEL,L.L.C.**, a Delaware limited liability company (the “Guarantor”) in favor of the Agent, for thebenefit of the Lenders, under the Credit Agreement referred to below;**WITNESSETH**:     **WHEREAS**, PARALLEL PETROLEUM CORPORATION, a Delaware corporation (“PPC”) and PARALLEL, L.P., aTexas limited partnership (“PLP”) (PPC and PLP collectively are hereinafter referred to as the“Principal”), Guarantor, CITIBANK TEXAS, N.A., a national banking association, having its principaloffice in Midland, Texas, as Joint Lead Arranger and Administrative Agent (the “Agent”), BNPPARIBAS, as Joint Lead Arranger and Syndication Agent, and certain other financial institutionsfrom time to time parties thereto (the “Lenders”) have entered into a certain Third Amended andRestated Credit Agreement dated of even date herewith (as same may be amended, modified or restatedfrom time to time, the “Credit Agreement”), providing, subject to the terms and conditions thereof,for extensions of credit to be made by the Lenders to the Principal;     **WHEREAS**, it is a condition precedent to the Agent and the Lenders executing the CreditAgreement that Guarantor execute and deliver this Guaranty whereby the Guarantor shall guaranteethe payment when due, subject to Section 9 hereof, of all Guaranteed Obligations and RateManagement Obligations, as defined below; and     **WHEREAS**, in consideration of the financial and other support that the Principal has provided,and such financial and other support as the Principal may in the future provide, to the Guarantor,and in order to induce the Lenders and the Agent to enter into the Credit Agreement, and theLenders and their Affiliates to enter into one or more Rate Management Transactions with thePrincipal, and because the Guarantor has determined that executing this Guaranty is in its interestand to its financial benefit, the Guarantor is willing to guarantee the obligations of thePrincipal under the Credit Agreement, any Note, any Rate Management Transaction, and the other LoanDocuments;     **NOW, THEREFORE**, in consideration of the premises and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:     SECTION l.1. Selected Terms Used Herein.     “Guaranteed Obligations” is defined to mean (i) all indebtedness, obligations and liabilitiesof either Principal to Agent or any Lender arising out of or pursuant to the provisions of theCredit Agreement, the Notes and other Loan Documents, (ii) all Rate Management Obligations, (iii)all indebtedness, obligations and liabilities of either Principal to any Lender of any kind orcharacter now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed,contingent, liquidated, unliquidated, joint, several or joint and several, and regardless ofwhether such indebtedness, obligations and liabilities may, prior to their acquisition by anyLender, be or have been payable to or in favor of a
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third party and subsequently acquired by any Lender (it being contemplated that any Lender maymake such acquisitions from third parties), including without limitation all indebtedness,obligations and liabilities of either Principal to any Lender now existing or hereafter arising bynote, draft, acceptance, guaranty, endorsement, letter of credit, assignment, purchase, overdraft,discount, indemnity agreement or otherwise, (iv) all accrued but unpaid interest on any of theindebtedness described in (i), (ii) and (iii) above, (v) all obligations of either Principal to anyLender under any documents evidencing, securing, governing and/or pertaining to all or any part ofthe indebtedness described in (i), (ii), (iii) or (iv) above, (vi) all costs and expenses incurredby any Lender in connection with the collection and administration of all or any part of theindebtedness and obligations described in (i), (ii), (iii), (iv) or (v) above or the protection orpreservation of, or realization upon, the collateral securing all or any part of such indebtednessand obligations, including without limitation all reasonable attorneys’ fees, and (vii) allrenewals, extensions, modifications and rearrangements of the indebtedness and obligationsdescribed in (i), (ii), (iii), (iv), (v) and (vi) above.     “Rate Management Obligations” means any and all obligations of either Principal, whetherabsolute or contingent and howsoever and whensoever created, arising, evidenced or acquired(including all renewals, extensions and modifications thereof and substitutions therefor), under(i) any and all Rate Management Transactions with Agent or a Lender or an Affiliate of Agent or aLender, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments ofany Rate Management Transactions.     SECTION 1.2. Terms in Credit Agreement. Other capitalized terms used herein but notdefined herein shall have the meaning set forth in the Credit Agreement.     SECTION 2.1. Representations and Warranties. The Guarantor represents and warrants(which representations and warranties shall be deemed to have been renewed upon each Borrowing Dateunder the Credit Agreement) that:     (a) It is a limited liability company duly and properly organized, validly existing andin good standing under the laws of the State of Delaware and has all requisite authority toconduct its business in each jurisdiction in which its business is conducted.     (b) It has the power and authority and legal right to execute and deliver this Guarantyand to perform its obligations hereunder. The execution and delivery by it of this Guarantyand the performance of its obligations hereunder have been duly authorized by propercorporate, partnership or limited liability company proceedings, and this Guarantyconstitutes a legal, valid and binding obligation of Guarantor enforceable against it inaccordance with its terms, except as enforceability may be limited by general principles ofequity and bankruptcy, insolvency or similar laws affecting the enforcement of creditors’rights generally.     (c) Neither the execution and delivery by it of this Guaranty, nor the consummation ofthe transactions herein contemplated, nor compliance with the provisions hereof will violate(i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding onit or any of its subsidiaries or (ii) its articles or certificate of incorporation,partnership agreement, limited liability company agreement, certificate of partnership,articles or certificate of organization, by-laws, or operating or other managementagreement, as the case may be, or
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(iii) the provisions of any indenture, instrument or agreement to which it or any of itssubsidiaries is a party or is subject, or by which it, or its Property, is bound, orconflict with or constitute a default thereunder, or result in, or require, the creation orimposition of any Lien in, of or on the property of Guarantor or a subsidiary thereofpursuant to the terms of any such indenture, instrument or agreement. No order, consent,adjudication, approval, license, authorization, or validation of, or filing, recording orregistration with, or exemption by, or other action in respect of any governmental or publicbody or authority, or any subdivision thereof, which has not been obtained by it or any ofits subsidiaries, is required to be obtained by it or any of its subsidiaries in connectionwith the execution and delivery of this Guaranty or the performance by it of its obligationshereunder or the legality, validity, binding effect or enforceability of this Guaranty.     SECTION 2.2. Covenants. The Guarantor covenants that, so long as any Lender has anyCommitment outstanding under the Credit Agreement, any Reimbursement Obligations remainoutstanding, any Rate Management Transaction remains in effect or any of the Guaranteed Obligationsshall remain unpaid, that it will, and, if necessary, will enable the Principal to, fully complywith those covenants and agreements set forth in the Credit Agreement.     SECTION 3. The Guaranty. Subject to Section 9 hereof, the Guarantor herebyabsolutely and unconditionally guarantees, as primary obligor and not as surety, the full andpunctual payment (whether at stated maturity, upon acceleration or early termination or otherwise,and at all times thereafter) and performance of the Guaranteed Obligations, including withoutlimitation any such Guaranteed Obligations incurred or accrued during the pendency of anybankruptcy, insolvency, receivership or other similar proceeding, whether or not allowed orallowable in such proceeding. Upon failure by the Principal to pay punctually any such amount, theGuarantor agrees that it shall forthwith on demand pay to the Agent for the benefit of the Lendersand, if applicable, their Affiliates, the amount not so paid at the place and in the mannerspecified in the Credit Agreement, any Note, any Rate Management Transaction or the relevant LoanDocument, as the case may be. This Guaranty is a guaranty of payment and not of collection. TheGuarantor waives any right to require any Lender, or any Affiliate of any Lender, to sue thePrincipal, any other guarantor, or any other Person obligated for all or any part of the GuaranteedObligations, or otherwise to enforce its payment against any Collateral securing all or any part ofthe Guaranteed Obligations.     SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the obligations ofthe Guarantor hereunder shall be unconditional and absolute and, without limiting the generality ofthe foregoing, shall not be released, discharged or otherwise affected by:     (i) any extension, renewal, settlement, compromise, waiver or release in respect of anyof the Guaranteed Obligations, by operation of law or otherwise, or any obligation of anyother guarantor of any of the Guaranteed Obligations, or any default, failure or delay,willful or otherwise, in the payment or performance of the Guaranteed Obligations;     (ii) any modification or amendment of or supplement to the Credit Agreement, any Note,any Rate Management Transaction or any other Loan Document;     (iii) any release, nonperfection or invalidity of any direct or indirect security forany obligation of the Principal under the Credit Agreement, any Note, the SecurityInstrument, any
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Rate Management Transaction, any other Loan Document, or any obligations of any otherguarantor of any of the Guaranteed Obligations, or any action or failure to act by theAgent, any Lender or any Affiliate of any Lender with respect to any collateral securing allor any part of the Guaranteed Obligations;     (iv) any change in the corporate existence, structure or ownership of the Principal orany other guarantor of any of the Guaranteed Obligations, or any insolvency, bankruptcy,reorganization or other similar proceeding affecting the Principal, or any other guarantorof the Guaranteed Obligations, or its assets or any resulting release or discharge of anyobligation of the Principal, or any other guarantor of any of the Guaranteed Obligations;     (v) the existence of any claim, setoff or other rights which the Guarantor may have atany time against the Principal, any other guarantor of any of the Guaranteed Obligations,the Agent, any Lender or any other Person, whether in connection herewith or any unrelatedtransactions;     (vi) any invalidity or unenforceability relating to or against the Principal, or anyother guarantor of any of the Guaranteed Obligations, for any reason related to the CreditAgreement, any Rate Management Transaction, any other Loan Document, or any provision ofapplicable law or regulation purporting to prohibit the payment by the Principal, or anyother guarantor of the Guaranteed Obligations, of the principal of or interest on any Noteor any other amount payable by the Principal under the Credit Agreement, any Note, any RateManagement Transaction or any other Loan Document; or     (vii) any other act or omission to act or delay of any kind by the Principal, any otherguarantor of the Guaranteed Obligations, the Agent, any Lender or any other Person or anyother circumstance whatsoever which might, but for the provisions of this paragraph,constitute a legal or equitable discharge of Guarantor’s obligations hereunder.     SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In CertainCircumstances. The Guarantor’s obligations hereunder shall remain in full force and effectuntil all Guaranteed Obligations shall have been indefeasibly paid in full, the Commitments underthe Credit Agreement shall have terminated or expired and all Rate Management Transactions haveterminated or expired. If at any time any payment of the principal of or interest on any Note orany other amount payable by the Principal or any other party under the Credit Agreement, any RateManagement Transaction or any other Loan Document is rescinded or must be otherwise restored orreturned upon the insolvency, bankruptcy or reorganization of the Principal or otherwise, theGuarantor’s obligations hereunder with respect to such payment shall be reinstated as though suchpayment had been due but not made at such time.     SECTION 6. Waivers. The Guarantor irrevocably waives acceptance hereof,presentment, demand, protest and, to the fullest extent permitted by law, any notice not providedfor herein, as well as any requirement that at any time any action be taken by any Person againstthe Principal, any other guarantor of any of the Guaranteed Obligations, or any other Person.     SECTION 7. Subrogation. The Guarantor hereby agrees not to assert any right, claimor cause of action, including, without limitation, a claim for subrogation, reimbursement,indemnification or
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otherwise, against the Principal arising out of or by reason of this Guaranty or theobligations hereunder, including, without limitation, the payment or securing or purchasing of anyof the Guaranteed Obligations by the Guarantor unless and until the Guaranteed Obligations areindefeasibly paid in full, any commitment to lend under the Credit Agreement and any other LoanDocuments is terminated and all Rate Management Transactions have terminated or expired.     SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any ofthe Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of thePrincipal, all such amounts otherwise subject to acceleration under the terms of the CreditAgreement, any Note, any Rate Management Transaction or any other Loan Document shall nonethelessbe payable by the Guarantor hereunder forthwith on demand by the Agent made at the request of theMajority Lenders.     SECTION 9. Limitation on Obligations.     (a) The provisions of this Guaranty are severable, and in any action or proceedinginvolving any state corporate law, or any state, federal or foreign bankruptcy, insolvency,reorganization or other law affecting the rights of creditors generally, if the obligationsof Guarantor under this Guaranty would otherwise be held or determined to be avoidable,invalid or unenforceable on account of the amount of Guarantor’s liability under thisGuaranty, then, notwithstanding any other provision of this Guaranty to the contrary, theamount of such liability shall, without any further action by the Guarantor, the Agent orany Lender, be automatically limited and reduced to the highest amount that is valid andenforceable as determined in such action or proceeding (such highest amount determinedhereunder being the Guarantor’s “Maximum Liability”). This Section 9(a) with respect to theMaximum Liability of the Guarantor is intended solely to preserve the rights of the Agenthereunder to the maximum extent not subject to avoidance under applicable law, and neitherthe Guarantor nor any other person or entity shall have any right or claim under thisSection 9(a) with respect to the Maximum Liability, except to the extent necessary so thatthe obligations of the Guarantor hereunder shall not be rendered voidable under applicablelaw.     (b) The Guarantor agrees that the Guaranteed Obligations may at any time and from timeto time exceed the Maximum Liability of the Guarantor, without impairing this Guaranty oraffecting the rights and remedies of the Agent hereunder. Nothing in this Section 9(b) shallbe construed to increase Guarantor’s obligations hereunder beyond its Maximum Liability.     SECTION 10. Application of Payments. All payments received by the Agent hereundershall be applied by the Agent to payment of the Guaranteed Obligations in the following orderunless a court of competent jurisdiction shall otherwise direct:     (a) FIRST, to payment of all costs and expenses of the Agent incurred in connectionwith the collection and enforcement of the Guaranteed Obligations or of any securityinterest granted to the Agent in connection with any Collateral securing the GuaranteedObligations;     (b) SECOND, to payment of that portion of the Guaranteed Obligations constitutingaccrued and unpaid interest and fees, pro rata among the Lenders and their Affiliates inaccordance with the amount of such accrued and unpaid interest and fees owing to each ofthem;
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     (c) THIRD, to payment of the principal of the Guaranteed Obligations then due andunpaid from the Principal to any of the Lenders or their Affiliates, Pro Rata among theLenders and their Affiliates in accordance with the amount of such principal then due andunpaid to each of them; and     (d) FOURTH, to payment of any Guaranteed Obligations (other than those listed above)Pro Rata among those parties to whom such Guaranteed Obligations are due in accordance withthe amounts owing to each of them.     SECTION 11. Notices. All notices, requests and other communications to any partyhereunder shall be given or made by telecopier or other writing and telecopied, or mailed ordelivered to the intended recipient at its address or telecopier number set forth on the signaturepages hereof or such other address or telecopy number as such party may hereafter specify for suchpurpose by notice to the Agent in accordance with the provisions of Section 17 of the CreditAgreement. Except as otherwise provided in this Guaranty, all such communications shall be deemedto have been duly given when transmitted by telecopier, or personally delivered or, in the case ofa mailed notice sent by certified mail return-receipt requested, on the date set forth on thereceipt (provided, that any refusal to accept any such notice shall be deemed to be notice thereofas of the time of any such refusal), in each case given or addressed as aforesaid.     SECTION 12. No Waivers. No failure or delay by the Agent or any Lender inexercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall anysingle or partial exercise thereof preclude any other or further exercise thereof or the exerciseof any other right, power or privilege. The rights and remedies provided in this Guaranty, theCredit Agreement, any Note, any Rate Management Transaction and the other Loan Documents shall becumulative and not exclusive of any rights or remedies provided by law.     SECTION 13. No Duty to Advise. The Guarantor assumes all responsibility for beingand keeping itself informed of the Principal’s financial condition and assets, and of all othercircumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,scope and extent of the risks that the Guarantor assumes and incurs under this Guaranty, and agreesthat neither the Agent nor any Lender has any duty to advise the Guarantor of information known toit regarding those circumstances or risks.     SECTION 14. Successors and Assigns. This Guaranty is for the benefit of the Agentand the Lenders and their respective successors and permitted assigns and in the event of anassignment of any amounts payable under the Credit Agreement, any Note, any Rate ManagementTransaction, or the other Loan Documents, the rights hereunder, to the extent applicable to theindebtedness so assigned, shall be transferred with such indebtedness. This Guaranty shall bebinding upon the Guarantor and its successors and permitted assigns.     SECTION 15. Changes in Writing. Neither this Guaranty nor any provision hereof maybe changed, waived, discharged or terminated orally, but only in writing signed by the Guarantorand the Agent with the consent of the Majority Lenders.
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     SECTION 16. Costs of Enforcement. The Guarantor agrees to pay all costs andexpenses including, without limitation, all court costs and attorneys’ fees and expenses paid orincurred by the Agent or any Lender or any Affiliate of any Lender in endeavoring to collect all orany part of the Guaranteed Obligations from, or in prosecuting any action against, the Principal,the Guarantor or any other guarantor of all or any part of the Guaranteed Obligations.     SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. THISGUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS. THEGUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FORTHE WESTERN DISTRICT OF TEXAS (MIDLAND DIVISION) AND OF ANY TEXAS STATE COURT SITTING IN MIDLAND,TEXAS AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY(INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATEDHEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTIONWHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT INSUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN ANINCONVENIENT FORUM. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY INANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATEDHEREBY.     SECTION 18. Taxes, etc. All payments required to be made by the Guarantor hereundershall be made without setoff or counterclaim and free and clear of and without deduction orwithholding for or on account of, any present or future taxes, levies, imposts, duties or othercharges of whatsoever nature imposed by any government or any political or taxing authority thereof(but excluding income and franchise taxes), provided, however, that if the Guarantor is required bylaw to make such deduction or withholding, Guarantor shall forthwith (i) pay to the Agent or anyLender, as applicable, such additional amount as results in the net amount received by the Agent orany Lender, as applicable, equaling the full amount which would have been received by the Agent orany Lender, as applicable, had no such deduction or withholding been made, (ii) pay the full amountdeducted to the relevant authority in accordance with applicable law, and (iii) furnish to theAgent or any Lender, as applicable, certified copies of official receipts evidencing payment ofsuch withholding taxes within 30 days after such payment is made.     SECTION 19. Setoff. Without limiting the rights of the Agent or the Lenders underapplicable law, if all or any part of the Guaranteed Obligations is then due, whether pursuant tothe occurrence of a Default or otherwise, then the Guarantor authorizes the Agent and the Lendersto apply any sums standing to the credit of the Guarantor with the Agent or any Lender toward thepayment of the Guaranteed Obligations.
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     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed, under seal, byits authorized officer as of the day and year first above written.      GUARANTOR: