```

                                                                                                          (unaudited)
                                                                                     December 31,         September 30,
                                                                                        2000*                2001
                                                                                   ---------------      ---------------
ASSETS
Current assets:
  Cash and cash equivalents                                                          $   2,000,826        $  3,512,695
  Accounts receivable:
    Oil and gas                                                                           4,057,527           2,144,079
    Others, net of allowance for doubtful account of $51,136 in
      2000 and 2001                                                                         319,818             226,797
  Affiliate                                                                                  19,569              13,963
                                                                                     --------------       --------------
                                                                                         4,396,914            2,384,839
  Other assets                                                                              27,166              226,497
  Deferred income taxes                                                                          -              603,820
                                                                                     -------------        -------------
         Total current assets                                                            6,424,906            6,727,851
                                                                                     -------------        -------------
Property and equipment, at cost:
  Oil and gas properties, full cost method                                              72,316,384           81,284,876
  Other                                                                                    372,765              559,278
                                                                                     -------------        -------------
                                                                                        72,689,149           81,844,154
  Less accumulated depreciation and depletion                                          (32,742,060)         (39,742,006)
                                                                                     -------------        -------------

        Net property and equipment                                                      39,947,089           42,102,148
                                                                                     -------------        -------------

Investment in First Permian, LLC                                                                -               75,267
Other assets, net of accumulated amortization of $114,971 in
2000 and $75,512 in 2001                                                                   84,442              308,366
                                                                                       -----------        -------------
                                                                                     $ 46,456,437         $ 49,213,632
                                                                                     =============        =============
```

```

                                                                                        December 31,      September 30,
                                                                                           2000*              2001
                                                                                      --------------    ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt                                                 $     803,531      $   1,283,000
  Investment liability in First Permian (Note 6)                                             366,765                  -
  Accounts payable and accrued liabilities:
    Trade                                                                                  2,443,773          2,948,854
    Affiliate                                                                                      -              6,392
  Income taxes payable (Note 4)                                                               50,000                  -
                                                                                       -------------      -------------
                                                                                           3,664,069          4,238,246
                                                                                       -------------      -------------

Long-term debt, excluding current maturities (Note 2)                                     11,624,000          8,717,000

Stockholders' equity:
  Series A preferred stock -- par value $.10 per share (aggregate liquidation
    preference of $26) authorized 50,000 shares, no shares issued and outstanding                  -                  -
  Preferred stock -- $.60 cumulative convertible preferred stock -- par value
    of $.10 per share (aggregate liquidation preference of $10) authorized
    10,000,000 shares, issued and outstanding 974,500 in 2000 and 2001                        97,450             97,450
  Common stock -- par value $.01 per share, authorized 60,000,000 shares,
    issued and outstanding 20,331,858 in 2000 and 20,461,361 in 2001                         203,319            204,613
  Additional paid-in capital                                                              34,238,078         33,968,032
  Retained earnings (deficit)                                                             (3,370,479)         1,988,291
                                                                                       -------------      -------------
Total stockholders' equity                                                                31,168,368         36,258,386

Commitments and contingencies (Note 9)
                                                                                       -------------      -------------
                                                                                       $  46,456,437      $  49,213,632
                                                                                       =============      =============
```

```

                                                        ---------------------------------- ----------------------------------
                                                              2000              2001           2000              2001
                                                          ------------     ------------    -------------     -------------
Oil and gas revenues                                      $ 4,162,667      $ 3,811,963     $ 10,133,872      $ 15,891,228
                                                          ------------     ------------    -------------     -------------
Cost and expenses:
  Lease operating expense                                     738,929          856,472        1,971,315         3,023,065
  General and administrative                                  182,250          363,758          640,209           965,847
  Depreciation, depletion and amortization                  1,299,187        1,527,252        3,581,798         4,822,819
  Impairment of oil and gas properties                              -        2,177,128                -         2,177,128
                                                          -----------      -----------     ------------      ------------
                                                            2,220,366        4,924,610        6,193,322        10,988,859
                                                          -----------      -----------     ------------      ------------
Operating income (loss)                                     1,942,301       (1,112,647)       3,940,550         4,902,369
                                                          -----------      -----------     ------------      ------------
Other income (expense), net:
  Equity in earnings (loss) of First Permian, LLC              (4,493)         442,032         (500,576)          442,032
  Interest income                                              62,779           31,803           94,024           114,591
  Other income                                                 38,522           19,140           86,959            69,553
  Interest expense                                           (337,519)        (167,064)      (1,029,266)         (641,575)
  Other expense                                                (2,891)             590           (4,872)         (132,020)
                                                          -----------      -----------     ------------      ------------
    Total other income (expense), net                        (243,602)         326,501       (1,353,731)         (147,419)
                                                          -----------      -----------     ------------      ------------
Income (loss) before income taxes                           1,698,699         (786,146)       2,586,819         4,754,950
Income tax benefit, net                                             -         (294,321)               -          (603,820)
                                                          -----------      -----------     ------------      ------------
    Net income (loss)                                     $ 1,698,699       $ (491,825)    $  2,586,819      $  5,358,770
                                                          ===========      ===========     ============      ============
Cumulative preferred stock dividend                       $   146,174       $  170,537     $    462,887      $    462,887
                                                          ===========      ===========     ============      ============
    Net income (loss) available to common stockholders    $ 1,552,525       $ (662,362)    $  2,123,932      $  4,895,883
                                                          ===========      ===========     ============      ============
Net income per common share:
  Basic                                                       $ 0.075         $ (0.030)         $ 0.105           $ 0.242
                                                          ===========      ===========     ============      ============
  Diluted                                                     $ 0.072         $ (0.030)         $ 0.103           $ 0.226
                                                          ===========      ===========     ============      ============
Weighted average common share outstanding
  Diluted                                                  23,511,753       20,453,902       20,635,568        23,722,688
                                                          ===========      ===========     ============      ============
```

```

                                                                                            Nine Months Ended September 30
                                                                                 ----------------------------------------------
                                                                                            2000                 2001
                                                                                    ------------------- ---------------------
Cash flows from operating activities:
  Net income                                                                            $ 2,586,819           $ 5,358,770

  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and depletion                                                             3,581,798             4,822,819
    Impairment of oil and gas properties                                                           -             2,177,128
    Equity in loss (income) from investments in First Permian, LLC                           500,576              (442,032)
    Deferred income taxes                                                                          -              (603,820)
    Other, net                                                                                  (163)             (223,924)
    Changes in assets and liabilties:
    Decrease (increase) in accounts receivables                                             (773,839)            2,012,075
    Decrease (increase) in prepaid expenses and other                                         28,507              (199,331)
    Increase in accounts payable and accrued liabilities                                     932,824               461,472
                                                                                        ------------          ------------
    Net cash provided by operating activities                                              6,856,522            13,363,157
                                                                                        ------------          ------------
Cash flows from investing activities:
  Additions to property and equipment                                                     (4,797,991)          (10,627,368)
  Proceeds from disposition of property and equipment                                      3,002,155             1,472,363
  Distribution from First Permian, LLC                                                        67,500                     -
                                                                                        ------------          ------------
    Net cash used in investing activities                                                 (1,728,336)           (9,155,005)
                                                                                        ------------          ------------

Cash flows from financing activities:
  Payments on bank line of credit                                                         (2,865,889)           (2,427,531)
  Proceeds from exercise of options and warrants                                                   -               145,410
  Payment of preferred stock dividend                                                       (462,887)             (414,162)
                                                                                        ------------          ------------
    Net cash used in financing activities                                                 (3,328,776)           (2,696,283)
                                                                                        ------------          ------------
Net increase in cash and cash equivalents                                                  1,799,410             1,511,869

Beginning cash and cash equivalents                                                        1,276,417             2,000,826
                                                                                        ------------          ------------
Ending cash and cash equivalents                                                        $  3,075,827          $  3,512,695
                                                                                        ============          ============
Non-cash financing activities:
  Accrued preferred stock dividend                                                      $    170,537          $    170,537
                                                                                        ============          ============
  Transfer of assets held for sale to oil and gas property                               $ 2,127,734                     -
                                                                                        ============          ============
```

```

                                                    Three Months Ended              Nine Months Ended
                                                       September 30                   September 30
                                         --------------------------------- ------------------------------
                                               2000               2001          2000            2001
                                         ------------         ------------ --------------  --------------
Total Revenues                           $  5,558,000         $10,176,000    $14,848,000     $24,039,000
Total Costs and Expenses                    3,765,000           5,184,000      9,855,000      14,069,000
                                         ------------ -       ------------   -----------     -----------
Operating Income                            1,793,000           4,992,000      4,993,000       9,970,000
Other Income and Expense, net              (1,505,000)         (1,760,000)    (5,222,000)     (7,018,000)
                                         ------------         -----------    -----------     -----------
Net Income                                    288,000           3,232,000       (229,000)      2,952,000
Extraordinary Loss from
  Debt Restructuring
                                                    -                   -        961,000               -
                                        -------------        ------------    -----------     -----------
Net Income before Preferred Dividends         288,000           3,232,000     (1,190,000)      2,952,000
   Preferred Dividends
                                              304,000             337,000        405,000         979,000
                                        -------------         -----------    -----------     -----------
Net Income Available to Common Units    $     (16,000)        $ 2,895,000    $(1,595,000)    $ 1,973,000
                                        =============         ===========    ===========     ===========
```

```

Type          Volume/Month           Term            Price             Commodity
----          ------------           ----            -----             ---------

Collar        40,000 barrels     7/01 - 12/02    $18.00-$28.75         WTI NYMEX

Collar        40,000 barrels     7/01 - 12/02    $19.00-$24.80         WTI NYMEX
```

```

                                                Three Months Ended             Nine Months Ended
                                                  September 30,                   September 30,
                                          ------------------------------- ----------------------------
                                                 2000            2001           2000           2001
                                          ---------------- -------------- -------------  -------------
Basic EPS Computation:
  Numerator-
    Net income                                 $ 1,698,699     $ (491,825)  $ 2,586,819    $ 5,358,770
    Preferred stock dividend                      (170,537)      (121,812)     (462,887)      (414,162)
                                          ---------------- -------------- -------------  -------------
    Net income available to common
      stockholders                             $ 1,528,162     $ (613,637)  $ 2,123,932    $ 4,944,608
                                          ================ ============== =============  =============
  Denominator-
  Weighted average common shares
    outstanding                                 20,331,858     20,453,902    20,331,858     20,436,461
                                          ================ ============== =============  =============
Basic earnings per share                           $ 0.075       $ (0.030)      $ 0.105        $ 0.242
                                          ================ ============== =============  =============

Diluted EPS Computation:
  Numerator-
    Net income                                 $ 1,698,699     $ (491,825)  $ 2,586,819    $ 5,358,770
    Preferred stock dividend                             -       (121,812)     (462,887)             -
                                          ---------------- -------------- -------------  -------------
    Net income available to common
      stockholders                             $ 1,698,699     $ (613,637)  $ 2,123,932    $ 5,358,770
                                          ================ ============== =============  =============
  Denominator-
  Weighted average common shares
    outstanding                                 20,331,858     20,453,902    20,331,858     20,436,461
  Employee stock options                           393,359              -       303,710        500,559
  Warrants                                           2,292              -             -          1,424
  Preferred stock                                2,784,244              -             -      2,784,244
                                          ---------------- -------------- -------------  -------------
                                                23,511,753     20,453,902    20,635,568     23,722,688
                                          ================ ============== =============  =============
Diluted earnings per share                         $ 0.072       $ (0.030)      $ 0.103        $ 0.226
                                          ================ ============== =============  =============
```

```

                                                     Three Months Ended         Three Months Ended
                                                ------------------------------  ------------------
                                                 3-31-01   6-30-01    9-30-01     9-30-00  9-30-01
                                                -------- - -------- ----------  ------------------
Production and prices:
  Oil (Bbls)                                      34,914    39,098     36,211    42,317    36,211
  Natural gas (Mcf)                            1,009,532   934,951    732,604   733,621   732,604
  Equivalent barrels of oil (EBO)                203,169   194,923    158,312   164,587   158,312

  Oil price (per Bbl)                            $ 27.81   $ 26.50    $ 23.91   $ 29.53   $ 23.91
  Gas price (per Mcf)                            $  6.25   $  4.02    $  4.02   $  3.97   $  4.02
  Price per EBO                                  $ 35.87   $ 24.58    $ 24.08   $ 25.29   $ 24.08

Results of operations per EBO:
Oil and gas revenues                             $ 35.87   $ 24.58    $ 24.08   $ 25.29   $ 24.08
Costs and expenses:
  Lease operating expense                           5.51      5.37       5.41      4.49      5.41
  General and administrative                        1.47      1.56       2.30      1.11      2.30
  Depreciation and depletion                        8.26      8.30       9.65      7.89      9.65
  Impairment of oil and gas properties                 -        -       13.75               13.75
                                                 -------   -------   --------   -------   -------
    Total costs and expense                        15.24     15.23      31.11     13.49     31.11
                                                 -------   -------   --------   -------   -------
Operating income (loss)                            20.63      9.35      (7.03)    11.80     (7.03)
                                                 -------   -------   --------   -------   -------
Interest expense, net                              (1.02)    (0.94)     (0.85)    (1.67)    (0.85)
Other income, net                                  (0.15)    (0.27)      0.12      0.22      0.12
                                                 -------   -------   --------   -------   -------
                                                   (1.17)    (1.21)     (0.73)    (1.45)    (0.73)
Equity in earnings (loss) of First Permian, LLC        -      2.79      (0.03)     2.79
                                                 -------   -------   --------   -------   -------
    Pretax income (loss) per EBO                   19.46      8.14      (4.97)    10.32     (4.97)
Income tax expense (benefit)                       (3.35)     1.90      (1.86)        -     (1.86)
                                                 -------   -------   --------   -------   -------
    Net income (loss) per EBO                    $ 22.81   $  6.24   $  (3.11)  $ 10.32   $ (3.11)
                                                 =======   =======   ========   =======   =======
Net operating cash flow before
  working capital adjustments                    $ 27.72   $ 16.44   $  15.64   $ 18.24   $ 15.64
                                                 =======   =======   ========   =======   =======
```

```

                                                     Nine Months Ended
                                               ------------------------------
                                                9-30-99   9-30-00    9-30-01
                                               --------- --------- ----------
Production and prices:
  Oil (Bbls)                                     122,518    126,353    110,222
  Natural gas (Mcf)                            2,092,750  1,961,164  2,677,087
  Equivalent barrels of oil (EBO)                471,310    453,214    556,403

  Oil price (per Bbl)                            $ 15.09    $ 27.80    $ 26.07
  Gas price (per Mcf)                            $  2.10    $  3.37    $  4.86
  Price per EBO                                  $ 13.25    $ 22.36    $ 28.56

Results of operations per EBO:
Oil and gas revenues                             $ 13.25    $ 22.36    $ 28.56
Costs and expenses:
  Lease operating expense                        3.53          4.35       5.43
  General and administrative                     1.36          1.41       1.74
  Depreciation and depletion                     6.96          7.90       8.67
  Impairment of oil and gas properties              -             -       3.91
                                             --------       -------    -------
     Total costs and expense                    11.85         13.66      19.75
                                             --------       -------    -------
Operating income                                 1.40          8.70       8.81
                                             --------       -------    -------
Interest expense, net                           (2.35)        (2.06)     (0.95)
Other income, net                                0.03          0.18      (0.11)
                                             --------       -------    -------
                                                (2.32)        (1.88)     (1.06)
Equity in earnings (loss) of First Permian, LLC  0.38         (1.10)      0.79
                                             --------       -------    -------
     Pretax income (loss) per EBO               (0.54)         5.72       8.54
Income tax benefit                                  -             -      (1.09)
                                             --------       -------    -------
     Net income (loss) per EBO               $  (0.54)      $  5.72    $  9.63
                                             ========       =======    =======
Net operating cash flow before
  working capital adjustments                $   6.04       $ 14.72    $ 20.33
                                             ========       =======    =======
```

```

                                                            Three Months Ended              Nine Months Ended
                                                    ------------------------------------ -------------------------
                                                      3-31-01     6-30-01     9-30-01      9-30-00      9-30-01
                                                    ------------ ----------- ----------- ------------ ------------
Oil and gas revenues                                      100.0       100.0       100.0        100.0        100.0
Costs and expenses:
  Lease operating expense                                  15.4        21.9        22.5         19.5         19.0
  General and administrative                                4.1         6.3         9.5          6.3          6.1
  Depreciation and depletion                               23.0        33.8        40.1         35.3         30.4
  Impairment of oil and gas properties                        -           -        57.1            -         13.7
                                                          -----       -----       -----        -----        -----
     Total costs and expenses                              42.5        62.0       129.2         61.1         69.2
                                                          -----       -----       -----        -----        -----
Operating income                                           57.5        38.0       (29.2)        38.9         30.8
                                                          -----       -----       -----        -----        -----
Interest expense, net                                      (2.9)       (3.8)       (3.5)        (9.2)        (3.3)
Other income (loss), net                                   (0.4)       (1.1)        0.5          0.8         (0.4)
                                                          -----       -----       -----        -----        -----
                                                           (3.3)       (4.9)       (3.0)        (8.4)        (3.7)
Equity in earnings (loss) of First Permian, LLC               -           -        11.6         (4.9)         2.8
                                                          -----       -----       -----        -----        -----
                                                           (3.3)       (4.9)        8.6        (13.3)        (0.9)
                                                          -----       -----       -----        -----        -----
     Pretax income (loss)                                  54.2        33.1       (20.6)        25.6         29.9

Income tax expense (benefit)                               (9.4)        7.7        (7.7)           -         (3.8)
                                                          -----       -----       -----        -----        -----
     Net income (loss)                                     63.6        25.4       (12.9)        25.6         33.7
                                                          =====       =====       =====        =====        =====
```

```

                                  September     September      October                Fair
                                    2002           2003          2003       Total     Value
                                  ---------     ---------      -------     -----     ------
                                              (In 000's, except interest rates)

Variable rate debt:

     Revolving facility (secured)   $ 1,283     $ 3,876        $ 4,841      $10,000   $10,000

          Average interest rate        6.0%        6.0%           6.0%

                          PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     At September 30, 2001,  we were  involved in one lawsuit  incidental to our
business.  In the opinion of  management,  the ultimate  outcome of this lawsuit
will not have a material  adverse  effect on  Parallel's  financial  position or
results of operations.  We are not aware of any other threatened litigation.  We
have  not  been  a  party  to  any  bankruptcy,  receivership,   reorganization,
adjustment or similar proceeding.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)                                                          Exhibits
 Exhibit No.                                          Description of Exhibit

     3.1  Certificate of Incorporation of Registrant  (incorporated by reference
          to Exhibit  3.1 to Form 10-K of the  Registrant  for the  fiscal  year
          ended December 31, 1998.)

     4.1  Certificate  of   Designations,   Preferences  and  Rights  of  Serial
          Preferred  Stock - 6% Convertible  Preferred  Stock  (Incorporated  by
          reference to Exhibit 4.1 to Form 10-Q of the Registrant for the fiscal
          quarter ended September 30, 1998.)

     4.2  Certificate  of  Designation,  Preferences  and  Rights  of  Series  A
          Preferred  Stock.  (Incorporated  by  reference to Exhibit 4.2 of Form
          10-K for the fiscal year ended December 31, 2000.)

     4.3  Rights Agreement,  dated as of October 5, 2000, between the Registrant
          and Computershare Trust Company, Inc., as Rights Agent.  (Incorporated
          by  reference  to Exhibit  4.3 of Form 10-K for the fiscal  year ended
          December 31,  2000.)  Executive  Compensation  Plans and  Arrangements

                                       22

                      (Exhibit No.'s 10.1 through 10.10):

     10.1  1983 Incentive Stock Option Plan(Incorporated by reference to Exhibit
           10.2 to Form S-l of the Registrant  (File No.  2-92397) as filed with
           the Securities and Exchange Commission on July 26, 1984,as amended by
           Amendments No. 1 and 2 on October  5, 1984,  and  October  25,  1984,
           respectively.)

     10.2  1992 Stock Option Plan (Incorporated  by reference to Exhibit 28.1 to
           Form S-8 of the  Registrant (File  No.  33-57348)  as filed  with the
           Securities and Exchange Commission on January 25, 1993.)

     10.3  Stock Option Agreement between the Registrant and Thomas R. Cambridge
           dated December 11, 1991 (Incorporated by reference to Exhibit 10.4 of
           Form 10-K of the  Registrant for the fiscal year ended  December  31,
           1992.)

     10.4  Stock Option Agreement between the Registrant and Thomas R. Cambridge
           dated October 18, 1993 (Incorporated  by reference to Exhibit 10.4(e)
           of Form 10-K of the Registrant for the fiscal year ended December 31,
           1993.)

     10.5  Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated  Prototype
           Simplified Employee Pension Plan(Incorporated by reference to Exhibit
           10.6 of the Registrant's Form 10-K for the fiscal year ended December
           31, 1995.)

     10.6  Non-Employee Directors Stock Option Plan(Incorporated by reference to
           Exhibit 10.6 of the Registrant's Form 10-K Report for the fiscal year
           ended December 31, 1997).

     10.7  1998 Stock Option Plan  (Incorporated by reference to Exhibit 10.7 of
           Form 10-K of the Registrant  for the fiscal year ended  December  31,
           1998.)

     10.8  2001  Non-Employee   Directors  Stock  Option  Plan  (Incorporated by
           referance  to  Exhibit  10.8 of Form 10-Q of the  Registrant  for the
           second quarter ended June 30, 2001).

    *10.9  Parallel Petroleum Corporation Employee Stock Option Plan.

    *10.10  Form of Parallel Petroleum  Corporation Change of Control Agreement,
           dated June 1, 2001, executed separately by the registrant and each of
           Thomas R.  Cambridge, Chairman  of the Board of  Directors;  Larry C.
           Oldham, Director and President; John S. Rutherford, Vice President of
           Land; and Eric A. Bayley, Vice President of Engineering.

     10.11 Restated  Loan  Agreement  dated  December  27,  1999,   between  the
           Registrant and Bank One, Texas,  N.A.  (Incorporated  by reference to
           Exhibit 10.8 of Form 10-K of the Registrant for the fiscal year ended
           December 31, 1999.)

     10.12 Loan  Agreement dated  December 18, 2000 between the  Registrant  and
           Bank United. (Incorporated  by reference to Exhibit 10.9 of Form 10-K
           for the fiscal year ended December 31, 2000.)

                                       23

     10.13 Certificate of Formation of First  Permian,  L.L.C. (Incorporated  by
           reference to Exhibit 10.1 of the  Registrant's  Form 8-K report dated
           June 30, 1999.)

     10.14 Limited  Liability   Company   Agreement  of  First  Permian,  L.L.C.
           (Incorporated  by reference to Exhibit 10.2 of the  Registrant's Form
           8-K report dated June 30, 1999.)

     10.15 Merger Agreement dated June 25, 1999. (Incorporated  by reference to
           Exhibit 10.3 of the Registrant's Form 8-K report dated June 30,1999.)

     10.16 Agreement and Plan of Merger of First  Permian,  L.L.C.  and Nash Oil
           Company, L.L.C.  (Incorporated  by  reference  to Exhibit 10.4 of the
           Registrant's Form 8-K report dated June 30, 1999.)

     10.17 Certificate of Merger of First Permian,  L.L.C. and Nash Oil Company,
           L.L.C  (Incorporated by reference to Exhibit 10.5 of the Registrant's
           Form 8-K Report dated June 30, 1999.)

     10.18 Amended and  Restated  Limited  Liability Company  Agreement of First
           Permian, L.L.C. dated as of May 31, 2000.  (Incorporated by reference
           to Exhibit 10.16 of Form 10-K for the fiscal year ended  December 31,
           2000.)

     10.19 Credit Agreement  dated June 30,  1999,  by and among First  Permian,
           L.L.C., Parallel Petroleum Corporation,  Baytech, Inc., and Bank One,
           Texas, N.A.  (Incorporated  by  reference  to  Exhibit  10.6  of  the
           Registrant's Form 8-K report dated June 30, 1999.)

     10.20 Limited  Guaranty,  dated June 30, 1999,  by and among First Permian,
           L.L.C.,  Parallel  Petroleum  Corporation,  and Bank One, Texas, N.A.
           (Incorporated  by reference to Exhibit 10.7 of the  Registrant's Form
           8-K report dated June 30, 1999.)

     10.21 Intercreditor  Agreement,  dated as of June  30, 1999,  by and  among
           First  Permian,  L.L.C.,  Bank One,  Texas,  N.A., Tejon  Exploration
           Company,  and  Mansefeldt  Investment  Corporation  (Incorporated  by
           reference  to Exhibit 10.8 of the  Registrant's Form 8-K report dated
           June 30, 1999.)

     10.22 Subordinated  Promissory  Note,  dated June 30, 1999, in the original
           principal amount of $8.0 million made by First Permian,L.L.C. payable
           to the order of Tejon Exploration  Company (Incorporated by reference
           to Exhibit 10.9 of the  Registrant's  Form 8-K report  dated June 30,
           1999.)

     10.23 Subordinated  Promissory Note,  dated June 30, 1999,  in the original
           principal amount of $8.0 million made by First Permian,L.L.C. payable
           to the order of Mansefeldt  Investment Corporation  (Incorporated  by
           reference to Exhibit 10.10 of the Registrant's  Form 8-K report dated
           June 30, 1999.)

     10.24 Second Restated Credit Agreement, dated October 25, 2000, among First
           Permian, L.L.C., Bank One, Texas, N.A., and Bank One Capital Markets,
           Inc. (Incorporated by reference to Exhibit 10.22 of Form 10-K for the
           fiscal year ended December 31, 2000.)
 ---------------------
*Filed herewith.

     (2)  Reports  on Form 8-K No  reports  were  filed on form 8-K  during  the
          quarter ended September 30, 2001.

                                       24

                                   SIGNATURES

     Pursuant to the  requirements  of the  Securities and 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:   November 14, 2001                    -----------------------------
                                             Thomas R. Cambridge
                                             Chairman of the Board of Directors
                                             and Chief Executive Officer

Date:   November 14, 2001            BY:     /s/ Larry C. Oldham
                                             -----------------------------
                                             Larry C. Oldham,
                                             President and Principal
                                             Financial Officer
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