Parallel lines up profit on hedging gain

Texas producer Parallel Petroleum saw third quarter net income surge on a large pre-tax gain on derivatives, amid record oil and gas prices.

Parallel reported net income of $58.6 million, or $1.41 per diluted share, in the quarter to the end of September. The period included a $65.7 million gain on derivatives. The period compares to net income of about $300,000, or one cent per diluted share, in the third quarter of 2007. The earlier period included a $4.6 million pre-tax loss on derivatives. Revenues for the period were $56.2 million, up from $29.5 million previously. In the period, the company reported oil sales of 274,000 barrels of oil, up from 254,000 barrels of oil previously, and gas sales of 2.89 billion cubic feet from 2.04 Bcf in the 2007 period. The company reported a 176% year-on-year increase in quarterly operating income to $31.2 million. Adjusted quarterly earnings before income tax, debt and amortisation rose 133% to $42.6 million. For the nine months to the end of September, Parallel reported net income of $26.7 million, including a $27.8 million pre-tax loss on derivatives. For the first nine months of 2007, the company reported net income of $3.7 million, or nine cents per diluted share, including a $11.2 million pre-tax loss on derivatives. Revenues for the first three quarter of 2008 were $156.2 million from $80 million previously. The company said it had slashed its fourth-quarter capital expenditure budget by 43% to about $23.6 million. Parallel also said it would fund its entire $118. 8 million 2009 capital expenditure earmark from its operating cash flow.
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