2009-02-26-2009-02-12-2009-02-12

To buy 35% interest in Barnett gas project for all wells drilled through 2016.

Parallel Petroleum Corp., Midland, Texas, (Nasdaq: PLLL) has entered a farmout agreement with Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) related to its Barnett shale gas project. Parallel holds approximately 35% interest in a Barnett gas project. Parallel will assign Chesapeake 100% of its leasehold in the Barnett for all wells drilled through Dec. 31, 2016, provided all wells drilled through that period will be treated as a separate project or payout period, creating eight separate project periods. Parallel will reserve and retain a 50% reversionary interest that will vest after Chesapeake recovers 150% of its costs for a particular payout period. Until 150% payout has been reached, Chesapeake will fund 100% of Parallel's costs for drilling, completing and operating wells during the payout period. On each project, Chesapeake is entitled to receive all revenues from Parallel's reversionary interest until Chesapeake receives revenues totaling 150% of the drilling, completion and operating costs Chesapeake incurs in funding Parallel's reversionary interest. Upon reaching 50% payout level for a given project, 50% of the interest assigned to Chesapeake will revert to Parallel. At that point, Parallel will pay all costs and receive all revenues attributable to its 50% reversionary interest in each project. For all wells drilled after Jan. 1, 2017, Parallel will pay all costs and receive all revenues attributable to its 50% reversionary interest.