<PAGE>
                                       1


                       SECURITIES AND EXCHANGE COMMISSION


                            WASHINGTON, D. C. 20549

                                  FORM 10-Q/A
                                Amendment No. 1

                          ----------------------------
                                   (Mark One)

/X/  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For  the quarterly period ended June 30, 1999 or

/ / Transition  report  pursuant  to Section  13 or 15(d) of the  Securities
    Exchange Act of 1934 For the Transition period from to

                           --------------------------

                         COMMISSION FILE NUMBER 0-13305

                           --------------------------


                         PARALLEL PETROLEUM CORPORATION
             (Exact name of registrant as specified in its charter)

        DELAWARE                                        75-1971716
(State of other jurisdiction of                (I.R.S. Employer Identification
 incorporation or organization)                          Number)

 One Marienfeld Place, Suite 465,
        Midland, Texas                                      79701
(Address of principal executive offices)                 (Zip Code)

                                 (915) 684-3727
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes 'X'     No

     At August 1, 1999, there were 18,331,858 shares of the Registrant?s  Common
Stock, $0.01 par value, outstanding.


================================================================================
<PAGE>
                                       2


                                     INDEX



PART I. - FINANCIAL INFORMATION                                         Page No.


ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

        Reference is made to the succeeding pages for the following
          financial statements:


        - Consolidated Balance Sheet as of December 31, 1998 and
          June 30, 1999 (unaudited)                                      4

        - Unaudited Consolidated Statements of Operations for the
          three months ended June 30, 1998 and 1999 and six months
          ended  June 30, 1998 and 1999                                  6

        - Unaudited Consolidated Statements of Cash Flows for the
          six months ended June 30, 1998 and 1999                        7

       -  Notes to Consolidated Financial Statements                     8


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      12


<PAGE>
                                       3




                                EXPLANATORY NOTE


     This amendment  reflects the unaudited pro forma results of operations that
include Parallel?s acquired interest in First Permian, LLC, as described in Note
2. The pro forma  results  for the six months  ended June 30, 1999 and 1998 give
effect to the acquisition as if it had occurred at the beginning of fiscal 1998.

<PAGE>
                                       4



                         PARALLEL PETROLEUM CORPORATION

                          CONSOLIDATED BALANCE SHEETS
<TABLE>



                                                    December 31,   June 30, 1999
ASSETS                                                1998*          (Unaudited)
-------------                                       ------------   --------------
<S>                                                 <C>             <C>

Current assets:
   Cash and cash equivalents                         $ 1,178,819     $ 1,218,599
   Accounts receivable:
     Oil and gas                                       1,432,659       1,366,385
     Others, net of allowance for doubtful accounts
       of $71,358 in 1998 and 1999                       247,740         405,776
     Affiliate                                            11,844              --
                                                    ------------    ------------
                                                       1,692,243       1,772,161
   Other assets                                           61,504          28,012
                                                    ------------    ------------
     Total current assets                              2,932,566       3,018,772
                                                    ------------    ------------
Property and equipment, at cost:
   Oil and gas properties, full cost method           65,565,466      87,117,125
   Other                                                 287,586         286,088
                                                    ------------    ------------
                                                      65,853,052      87,403,213
        Less accumulated depreciation and depletion   22,279,355      24,140,149
                                                    ------------    ------------
                Net property and equipment            43,573,697      63,263,064
                                                    ------------    ------------
Other assets, net of accumulated amortization of
     $86,917 in 1998 and $95,248 in 1999                  58,519         278,664
                                                    ------------    ------------
                                                    $ 46,564,782    $ 66,560,500
                                                    ============    ============
</TABLE>
<PAGE>
                                       5


                         PARALLEL PETROLEUM CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                                  (Continued)


<TABLE>
                                                     December 31,    June 30, 1999
LIABILITIES AND STOCKHOLDERS? EQUITY                    1998*         (Unaudited)
------------------------------------                 ------------    --------------
<S>                                                  <C>             <C>

Current liabilities:
   Accounts payable and accrued liabilities:
     Current portion of affiliate?s long-term
       debt (Note 3)                                    $        --         $  506,250
     Subordinated notes payable (Note 4)                         --          3,600,000
     Trade                                                2,803,539          2,142,738
     Affiliate                                                  214              6,423
     Preferred stock dividend                                    --             24,362
                                                       ------------       ------------
     Total current liabilities                            2,803,753          6,279,773
                                                       ------------       ------------
  Long-term debt:
     Bank credit facility (Note 3)                       18,035,889         18,815,889
     Proportionate share of affiliate's long-
       term debt, net of current portion(Note 3)                --          16,143,750
                                                      ------------        ------------
     Total long-term debt                               18,035,889          34,959,639

   Deferred income taxes                                       --                   --

Stockholders' equity:

   Preferred stock ? 6% convertible preferred stock -
     par value $.10 per share(aggregate liquidation
     preference of $10) authorized 10,000,000 shares,
     issued and outstanding 974,500 in 1998 and 1999       97,450               97,450
   Common stock - par value $.01 per share, authorized
     60,000,000 shares, issued and outstanding
     18,306,858 in 1998 and 18,331,858 in 1999            183,069              183,319
   Additional paid-in surplus                          32,341,971           32,042,197
   Retained deficit                                    (6,897,350)          (7,001,878)
                                                     ------------         ------------
     Total stockholders' equity                        25,725,140           25,321,088

Contingencies
                                                     ------------         ------------
                                                     $ 46,564,782         $ 66,560,500
                                                     ============         ============

</TABLE>




*The balance  sheet as of December  31, 1998 has been  derived  from  Parallel's
audited  financial  statements.  The accompanying  notes are an integral part of
these financial statements.

<PAGE>
                                       6


                         PARALLEL PETROLEUM CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>

                                          Three Months Ended      Six Months Ended
                                              June 30,                June 30,
                                       ----------------------   --------------------
                                           1998        1999          1998       1999
                                       ----------  ---------    ---------- ----------
<S>                                    <C>         <C>          <C>        <C>

Oil and gas revenues                   $2,453,140  $1,991,727   $4,565,703  $3,954,816
                                       ----------  ----------   ----------  ----------
Cost and expenses:
  Lease operating expense                613,053      551,142    1,170,691   1,064,964
  General and administrative             199,117      220,911      419,505     424,148
  Depreciation, depletion
     and amortization                  1,063,466      956,958    1,994,283   1,860,794
                                      ----------   ----------   ----------  ----------
                                       1,875,636    1,729,011    3,584,479   3,349,906
                                      ----------   ----------   ----------  ----------
          Operating income               577,504      262,716      981,224     604,910
                                      ----------   ----------   ----------  ----------
Other income (expense), net:
   Interest income                           395       13,695          470      26,971
   Other income                           37,552        6,606       51,111      13,229
   Interest expense                     (341,817)    (376,057)    (646,095)   (747,128)
   Other expense                          (4,195)      (1,204)      (8,577)     (2,509)
                                      ----------   ----------   ----------  ----------
          Total other expense, net      (308,065)    (356,960)    (603,091)   (709,437)
                                      ----------   ----------   ----------  ----------
Income (loss) before income taxes        269,439      (94,244)     378,133    (104,527)

Income tax expense -deferred              88,826           --      124,695          --
                                      ----------   ----------   ----------  ----------
          Net income (loss)           $  180,613   $ (94,244)   $  253,438  $ (104,527)
                                      ==========   =========    ==========  ==========
Cumulative preferred stock dividend   $   68,000   $ 146,175    $   68,000  $  316,713
                                      ==========   =========    ==========  ==========
          Net income (loss) available
             to common stockholders   $  112,613   $(240,419)   $  185,438  $ (421,240)
                                      ==========   =========    ==========  ==========
Net income (loss) per common share
          Basic                       $     .006   $   (.013)   $     .010  $    (.023)
                                      ==========   =========    ==========  ==========
          Diluted                     $     .006   $   (.013)   $     .010  $    (.023)
                                      ==========   =========    ==========  ==========
Weighted average common shares
   Outstanding - diluted              18,123,822   18,331,858   18,121,533  18,120,194
                                      ==========   =========    ==========  ==========

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>
                                       7



                         PARALLEL PETROLEUM CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>

                                                                Six Months Ended June 30,
                                                               ---------------------------
                                                                  1998              1999
                                                              ----------        ----------
<S>                                                            <C>              <C>
Cash flows from operating activities:
        Net income (loss)                                     $  253,438       $  (104,527)
        Adjustments to reconcile net income (loss) to
          net cash provided by (used in) operating
                activities:
                Depreciation, depletion and amortization       1,994,283         1,860,794
        Incomes taxes                                            124,695                --
        Other, net                                                (5,702)         (220,145)

        Changes in assets and liabilities:
                Decrease in trade receivables                    (53,602)          (79,918)
                (Increase) decrease in prepaid expenses
                        and other                                (73,701)           33,492
                Decrease in accounts payable
                  and accrued liabilities                     (1,419,721)         (630,230)
                Increase in current portion of affiliate
                  long-term debt                                      --           506,250
                Increase in subordinated notes payable                --         3,600,000
                                                             -----------       -----------
        Net cash provided by operating
                           activities                            819,690         4,965,716
                                                             -----------       -----------
Cash flows from investing activities:
        Additions to property and equipment                  (12,953,814)      (21,805,401)
        Proceeds from disposition of property and equipment           --           255,240
                                                             -----------       -----------
                        Net cash used in investing
                           activities                        (12,953,814)      (21,550,161)
                                                             -----------       -----------
Cash flows from financing activities:
        Proceeds from the issuance of long-term debt          13,343,000        16,923,750
   Payment of long-term debt                                  (7,234,000)               --
   Proceeds from exercise of options and warrants                 53,438            17,188
        Stock offering costs                                     (80,851)               --
   Proceeds from preferred stock issuance                      6,000,000                --
        Payment of preferred stock dividend                      (68,000)         (316,713)
                                                             -----------       -----------
                        Net cash provided by financing
                           activities                         12,013,587        16,624,225
                                                             -----------       -----------
                        Net increase (decrease) in cash
                        and cash equivalents                    (120,537)           39,780
Beginning cash and cash equivalents                              597,149         1,178,819
                                                             -----------       -----------
Ending cash and cash equivalents                             $   476,612       $ 1,218,599
                                                             ===========       ===========

Non-cash financing activities:
        Accrued preferred stock dividend                     $        --       $    24,362
                                                             ===========       ===========

</TABLE>


The accompanying notes are an integral part of these financials.

<PAGE>
                                       8




                         PARALLEL PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
Parallel  and,  with respect to our  consolidated  balance  sheet as of June 30,
1999, our pro rata share of the assets and liabilities associated with our 22.5%
membership  interest in First Permian,  LLC. First Permian is a Delaware limited
liability  company formed on June 25, 1999 for the purpose of acquiring a wholly
owned,  indirect  subsidiary  of Fina Oil and  Chemical  Company.  See Note 2 to
Consolidated Financial Statements.

     There is no reportable  income or expense  associated  with our interest in
First Permian for the current reporting period. In subsequent reporting periods,
our statements of operations and cash flows will be  consolidated to reflect our
pro rata share of the income and expenses of First Permian.

     The  financial  information  included  herein,  with the  exception  of the
balance sheet as of December 31, 1998, is unaudited.  However,  such information
includes all adjustments  (consisting  solely of normal  recurring  adjustments)
which are, in the opinion of  management,  necessary for a fair statement of the
results of operations for the interim periods. The results of operations for the
interim period are not necessarily  indicative of the results to be expected for
an entire year.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted in this Form 10-Q  Report  pursuant  to certain
rules and regulations of the Securities and Exchange Commission. These financial
statements should be read in conjunction with the financial statements and notes
included in Parallel's 1998 Annual Report and 1998 Form 10-K.

NOTE 2. RECENT EVENTS

     On June 30, 1999, First Permian and a wholly owned,  indirect subsidiary of
Fina Oil and Chemical Company  consummated a cash merger.  First Permian was the
surviving  entity.  The transaction was accounted for as a purchase.  The assets
acquired consisted  primarily of producing oil and gas properties located in the
Permian Basin of west Texas.  After giving effect to purchase price adjustments,
First Permian paid to Fina cash in the aggregate amount of  approximately  $92.0
million.  Our  proportionate  share of the book  value  of the  assets  acquired
through the cash merger is  approximately  $20.0 million and is reflected in the
June 30, 1999 consolidated balance sheet.

     First  Permian  is owned by  Parallel,  Baytech,  Inc.,  Tejon  Exploration
Company and Mansefeldt Investment Corporation. Baytech, Tejon and Mansefeldt are
privately held oil and gas  companies.  Parallel and Baytech are the managers of
First Permian and each owns a 22.5% membership  interest.  Tejon Exploration and
Mansefeldt  Investment  each own a 27.5% interest in First  Permian.  If certain
conditions are met regarding the prepayment of $16.0 million aggregate principal
amount of  subordinated  unsecured  notes made by First  Permian  and payable to
Tejon and  Mansefeldt,  the  proceeds  of which  were used to help  finance  the
acquisition,  Parallel?s interest in First Permian could increase to 37.5% for a
nominal fee per membership unit.

     The  purchase was  financed,  in part,  with the proceeds of the  revolving
credit facility provided by Bank One, Texas, N.A. to First Permian.  On June 30,
1999, Parallel and Baytech entered into a credit agreement with Bank One, Texas,
N.A.  that  established  the  $110.0  million  revolving  credit  facility.  The
principal amount of the initial loan from Bank One is $74.0 million.  Parallel?s
obligation is limited to a guaranty of $10.0 million of the bank borrowings. See
Note 3 to Consolidated Financial Statements for further discussion of the credit
facility.

     Additional  financing for the cash merger was obtained through subordinated
debt  borrowings,  which included $8.0 million  borrowed from Tejon  Exploration
Company and $8.0 million borrowed from Mansefeldt  Investment.  The terms of the
subordinated  debt and the effect on  Parallel?s  balance sheet are discussed in
Note 4 to Consolidated  Financial statements.


<PAGE>
                                       9



     The following  unaudited pro forma results of operations for the six months
ended  June 30,  1999 and  1998  give  effect  to the  acquisition  as if it had
occurred at the beginning of fiscal 1998.


<TABLE>

                                                     Six Months Ended June 30,
                                                   ----------------------------
                                                      1999              1998
                                                      ----              ----
<S>                                                 <C>               <C>

Oil and gas revenues                              $ 6,247,719      $ 7,071,171

Income (loss) before income taxes                    (727,976)          46,778

Net income (loss)                                    (480,465)          30,873

Net loss available to common shareholders            (797,176)         (37,127)

Net loss per common share
     Basic                                           $  (.044)         $ (.002)

     Diluted                                         $  (.044)         $ (.002)

</TABLE>


NOTE 3. LONG TERM DEBT

     Our long term debt at June 30, 1999 consisted of the following:

     Revolving credit  facility  note payable to bank at
       the bank's base lending rate plus .25%
       (8.0% at June 30, 1999)                                    $18,815,889

     Affiliate debt: Parallel's proportionate share
       (22.5%) of the First Permian, LLC
       revolving credit facility note payable
       to bank at bank?s base lending rate
       plus 1.5% (9.25% at June 30, 1999)                          16,650,000
                                                                  -----------
                                                                  $35,465,889

     Less: Parallel?s proportionate share of
       current maturities of affiliate debt                           506,250
                                                                  -----------
                Total long term debt                              $34,959,639
                                                                  ===========
    Scheduled maturities of Parallel's debt and
       our proportionate share of affiliate's
       debt at June 30, 1999 are as follows:

                        2000                                      $   506,250
                        2001                                       19,490,889
                        2002                                       15,468,750
                                                                  -----------
                                                                  $35,465,889
                                                                  ===========

     Revolving Credit Facility. At June 30, 1999, Parallel was a party to a loan
agreement with Bank One, Texas,  N.A. Under terms of the loan agreement,  we may
borrow up to the lesser of $30,000,000 or the ?borrowing  base?  then in effect.
The borrowing  base in effect at June 30, 1999 was  $18,815,889  (the  Revolving
Facility).  The borrowing base was subject to reduction by a monthly  commitment
reduction of $380,000. However, effective March 23, 1999, the monthly commitment
reduction  was  suspended  by the  bank  until  May 1,  1999 at  which  time the

<PAGE>
                                       10




borrowing   base  and  monthly   commitment   reduction   were   scheduled   for
redetermination.  The  loan  agreement  provides  for a  redetermination  of the
borrowing base and monthly commitment  reduction every six months on April 1 and
October 1 of each year or at such other times as the bank elects. As of the date
of this  Form  10-Q  Report,  we had not  received  notice  from the bank of the
redetermined  borrowing base or monthly  reduction  amount. At June 30, 1999, we
had borrowed all the funds currently available under the Revolving Facility. All
indebtedness  under the  Revolving  Facility  matures July 1, 2001.  The loan is
secured by substantially  all of our oil and gas properties.  Commitment fees of
 .25% per annum on the  difference  between the  commitment and the average daily
amount outstanding are due quarterly.

     The unpaid  principal  balance of the Revolving  Facility bears interest at
our  election at a rate equal to (i) the bank?s base  lending  rate plus .25% or
(ii) the  bank's  Eurodollar  rate  plus a margin  of 2.5%.  Interest  under the
Revolving  Facility is due and payable  monthly.  At June 30, 1999, the interest
rate was the bank?s base rate plus .25% or 8.0%.

     The loan agreement  contains various  restrictive  covenants and compliance
requirements,  which include (1) maintenance of certain  financial  ratios,  (2)
limiting the incurrence of additional  indebtedness,  (3) prohibiting payment of
dividends  on common  stock,  and (4)  prohibiting  the payment of  dividends on
preferred  stock  when an event  of  default  under  the  loan  agreement  is in
existence.

     At June 30, 1999 we were in default under our loan  agreement for events of
noncompliance  with certain covenants of the loan agreement.  We have obtained a
waiver of the default from our bank lender.

     Long Term Debt of Affiliate. On June 30, 1999, Parallel,  Baytech and First
Permian  entered  into a credit  agreement  with  Bank  One,  Texas,  N.A.  that
established a $110.0 million revolving credit facility to finance,  in part, the
merger of a wholly owned,  indirect  subsidiary of Fina Oil and Chemical Company
into First Permian.  The principal  amount of the initial loan from Bank One was
$74.0 million.  Under terms of the credit agreement,  dated June 30, 1999, as of
August 12, 1999, the principal  amount  outstanding  under the revolving  credit
facility bears interest,  at First Permian?s  election,  at Bank One?s base rate
plus 1.50% or the Eurodollar  rate plus 4.50% until such time that  subordinated
debt in the principal  amount of $16.0 million has been paid in full. See Note 4
to Consolidated  Financial Statements.  When these subordinated  unsecured loans
have been paid in full, the revolving credit facility will bear interest at Bank
One?s base rate or the Eurodollar rate plus 2.50%.

     The credit  facility  provides for  revolving  loans subject to a borrowing
base and a monthly  commitment  reduction.  The initial  borrowing base is $74.0
million and the initial monthly  commitment  reduction  amount is $250,000.  The
monthly commitment  reduction  commences on October 1, 1999 and continues with a
like reduction on the first day of each following  month. The borrowing base and
the  monthly  commitment  reduction  amount may be  redetermined  by the bank on
January 1 and July 1 of each year or at other times  requested by First Permian.
All outstanding principal under the revolving credit facility is due and payable
on July 1, 2002.  Interest is payable on the last day of each month. The loan is
secured  by  substantially  all of the  oil  and gas  properties  First  Permian
acquired  from  Fina  Oil  and  Chemical  Company.  Parallel  and  Baytech  each
guaranteed $10.0 million of the loans from Bank One. Our proportionate  share of
First Permian?s long term debt is $16,650,000.

NOTE 4. AFFILIATE SUBORDINATED UNSECURED LOANS

     In addition to the $74.0 million loan from Bank One, First Permian borrowed
$8.0 million  from Tejon  Exploration  Company and $8.0 million from  Mansefeldt
Investment Corporation to help finance the acquisition of oil and gas properties
from Fina Oil and Chemical Company.  Under terms of an Intercreditor  Agreement,
dated June 30, 1999,  the loans made by Tejon and  Mansefeldt  are unsecured and
subordinate in all respects to the senior loans made by Bank One.

     Each loan requires a principal payment of $2.5 million on December 31, 1999
and $5.5 million on June 30, 2000.  Principal payments on the subordinated loans
are subject to certain restrictions. Our proportionate share of the subordinated
debt is $3.6  million and is  reflected  on our June 30, 1999  balance  sheet as
subordinated notes payable.

NOTE 5. PREFERRED STOCK

     We have outstanding 974,500 shares of 6% Convertible Preferred Stock, $0.10
par value per share.  Cumulative annual dividends of $0.60 per share are payable
semi-annually  on June 15 and December 15 of each year.  Each share of Preferred
Stock may be  converted,  at the option of the  holder,  into  2.8571  shares of

<PAGE>
                                       11



common  stock at an  initial  conversion  price of $3.50 per  share,  subject to
adjustment in certain events.  The preferred stock has a liquidation  preference
of $10 per share and has no voting  rights,  except as  required  by law. We may
redeem the preferred  stock,  in whole or part,  after October 20, 1999, for $10
per share plus accrued and unpaid dividends.

NOTE 6: FULL COST CEILING TEST

     We use the  full  cost  method  to  account  for our oil and gas  producing
activities.  Under the full cost method of accounting, the net book value of oil
and gas  properties,  less  related  deferred  income  taxes,  may not  exceed a
calculated  ?ceiling.?  The  ceiling  limitation  is  the  discounted  estimated
after-tax future net revenues from proved oil and gas properties. In calculating
future net  revenues,  current  prices  and costs are  generally  held  constant
indefinitely. The net book value, less relate deferred income taxes, is compared
to the  ceiling  on a  quarterly  and annual  basis.  Any excess of the net book
value,  less related  deferred  income  taxes,  is  generally  written off as an
expense. Under rules and regulations of the SEC, the excess above the ceiling is
not  written off if,  subsequent  to the end of the quarter or year but prior to
the release of the financial results, prices increased sufficiently such that an
excess  above the ceiling  would not have existed if the  increased  prices were
used in the calculations.

     During the fourth  quarter of 1998,  we  recognized  a non-cash  impairment
charge of $15.0 million, or $12.0 million net of tax, related to our oil and gas
reserves  and  unproved  properties.  The  impairment  of oil and gas assets was
primarily  the result of the effect of  significantly  lower oil and natural gas
prices on both proved and unproved oil and gas properties. At June 30, 1999, our
net book value of oil and gas, less related deferred income taxes, was below the
calculated  ceiling.  As a result, we were not required to record a reduction of
our oil and gas properties under the full cost method of accounting.

NOTE 7. NET INCOME PER COMMON SHARE

     In 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 128,  "Earnings per Share" ("FAS 128"). FAS
128 replaced the  calculation  of primary and fully  diluted  earnings per share
with basic and diluted  earnings per share.  Unlike primary  earnings per share,
basic earnings per share excludes any dilutive effects of options,  warrants and
convertible  securities and is computed by dividing  income  available to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted  earnings  per share is computed  similarly  to the  previously
reported fully diluted earnings per share and reflects the assumed conversion of
all potentially dilutive securities.

<TABLE>

                                           THREE MONTHS ENDED                SIX MONTHS ENDED
                                                JUNE 30,                          JUNE 30,
                                          ------------------------      ------------------------
                                              1998         1999            1998          1999
                                          ------------ -----------      -----------  -----------
<S>                                       <C>          <C>              <C>          <C>

Basic EPS Computation:
        Numerator -
           Net income (loss)              $  180,613   $  (94,244)     $  253,438       (104,527)
           Preferred stock dividend          (68,000)    (146,175)        (68,000)       316,713)
                                          ----------   ----------      ----------     ----------
           Net income (loss) available to
             common stockholders             112,613     (240,419)        185,438       (421,240)
                                         ===========   ==========      ==========     ==========
        Denominator -
           Weighted average common
              shares outstanding          18,123,822   18,331,858      18,121,533     18,120,194
                                         -----------  -----------      ----------     ----------

Basic earnings (loss) per share                $.006      $ (.013)         $ .010         $(.023)
                                         ===========   ==========      ==========     ==========
Diluted EPS Computation
        Numerator -
           Net income (loss)              $  180,613   $  (94,244)     $  253,438     $ (104,527)
           Preferred stock dividends         (68,000)    (146,175)        (68,000)      (316,713)
                                          ----------   ----------      ----------     ----------
           Net income (loss) available to
              common stockholders            112,613     (240,419)        185,438       (421,240)
                                         ===========   ==========      ==========     ==========
        Denominator -
           Weighted average
             common shares outstanding    18,123,822   18,331,858      18,121,533     18,120,194

Diluted earnings (loss) per share             $ .006      $ (.013)        $ (.010)        $(.023)
                                          ==========   ==========      ==========     ==========

</TABLE>

     Employee stock options to purchase  shares of common stock and  convertible
preferred stock were outstanding during the six-month period ended June 30, 1999

<PAGE>
                                       12



but were not included in the  computation  of diluted net loss per share because
either (i) the  employee  stock  options?  exercise  price was greater  than the
average  market price of the common  stock of  Parallel,  (ii) the effect of the
assumed  conversion  of  Parallel's  preferred  stock to common  stock  would be
antidilutive,  or (iii) Parallel had net loss from  continuing  operations  and,
therefore, the effect would be antidilutive.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our major market risk exposure is in the pricing  applicable to our oil and
natural gas production.  Realized  pricing is primarily driven by the prevailing
domestic  price for crude oil and spot prices  applicable to the region in which
we produce natural gas. Historically, prices received for oil and gas production
have been volatile and unpredictable.

     Effective  July 1,  1999,  a portion  of the  future  crude oil  production
associated  with our  membership  interest in First  Permian was hedged  against
price risks through the use of swap  contracts.  Settlements of gains and losses
on  price  swap  contracts  are  realized  monthly,  generally  based  upon  the
difference  between the contract  price and the average  closing NYMEX price and
are reported as a component of oil and gas revenues and operating  cash flows in
the period realized. There were no gains or losses at June 30, 1999.

     While  the use of these  price  risk  management  arrangements  limits  the
downside risk of adverse price movements, it may also limit future revenues from
favorable price movements. These hedging activities will be conducted with major
financial or commodities  trading  institutions that management  believes entail
acceptable levels of market and credit risks.

     The  following  table  sets  forth  our pro rata  share of First  Permian's
outstanding oil hedge  contracts,  which were effective at July 1, 1999. At June
30, 1999, we did not have any hedging contracts in place.

<TABLE>

Type              Volume/Month        Term              Price       Commodity
----              ------------        ----              -----       ---------
<S>               <C>                <C>               <C>          <C>

Swap             22,500 barrels   7/1/99 - 12/31/99    $19.02       WTI NYMEX
Swap             21,600 barrels   1/1/00 - 12/31/00    $18.07       WTI NYMEX
Swap             20,475 barrels   1/1/01 -  6/30/01    $17.70       WTI NYMEX
Commodity Swap   11,250 barrels   8/1/99 - 12/31/99    $1.28        Differential between
                                                                    Platts WTI /Platts WTS
Commodity Swap   11,250 barrels   8/1/99 - 12/31/99    $1.24        Differential between
                                                                    Platts WTI /Platts WTS
</TABLE>



     Our only  financial  instrument  sensitive to changes in interest  rates is
bank debt. Our annual  interest costs in 1999 will fluctuate based on short-term
interest  rates.  As the interest rate is variable and reflects  current  market
conditions,  the carrying value approximates the fair value. The following table
shows  principal  cash flows and  related  weighted  average  interest  rates by
expected  maturity  dates.  Weighted  average  interest  rates  for the  secured
revolving  facility were  determined  using weighted  average  interest paid and
accrued in December 1998.  Weighted  average interest rates for the non-recourse
affiliate  debt were  determined  using the interest  rate in effect on June 30,
1999, the date of the Fina property acquisition.

<TABLE>

Value                                   1999      2000       2001        2002     Total       Fair Value
--------------------------------------------------------------------------------------------------------
                       (in 000's, except interest rates)

<S>                                    <C>        <C>        <C>         <C>      <C>         <C>

Variable rate debt
     Revolving facility (secured)         -          -      $18,816         -     $18,816         $18,816
        Average interest rate          7.50%      7.50%        7.50%
                                                  $506         $675   $15,469     $16,650         $16,650

Affiliate debt
        Average interest rate          9.25%      9.25%        9.25%

</TABLE>

<PAGE>
                                       13




                                   SIGNATURES



     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                        PARALLEL PETROLEUM CORPORATION


                                        BY:  /s/ THOMAS R. CAMBRIDGE
Date:   January 19, 2000                ------------------------------------
                                        Thomas R. Cambridge
                                        Chairman of the Board of Directors
                                        and Chief Executive Officer



Date:   January 19, 2000                BY:  /s/ LARRY C. OLDHAM
                                        ------------------------------------
                                        Larry C. Oldham,
                                        President (Principal Financial Officer)