A Growth Company

A Growth Company

IPAA OGIS Small Cap Conference

The Ritz-Carlton Palm BeachManalapan, Florida

February 7, 2005

2

Forward-Looking Statements

Some statements contained in this presentation are "forward-looking statements". All statements other than statements of historical facts included in this report, including, without limitation, statements regarding planned capital expenditures, the availability of capital resources to fund capital expenditures, estimates of proved reserves, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology like "may," "will," "expect," "intend," "anticipate," "estimate," "continue," "present value," "future" or "reserves" or other variations or comparable terminology. We believe the assumptions and expectations reflected in these forward-looking statements are reasonable. However, we can't give any assurance that our expectations will prove to be correct or that we will be able to take any actions that are presently planned. All of these statements involve assumptions of future events and risks and uncertainties. Risks and uncertainties associated with forward-looking statements include, but are not limited to: fluctuations in prices of oil and gas; future capital requirements and availability of financing; geological concentration of our reserves; risks associated with the drilling of wells; competition; general economic conditions; governmental regulations; potential defaults in the payment of amounts owed to us by purchasers of our production and counterparties to our hedging contracts; and risks of hedging activities.

For these and other reasons, actual results may differ materially from those projected or implied. We caution you against putting undue reliance on forward-looking statements or projecting any future results based on such statements.

3

Predictable Growth…Through a Proven Strategy

Niche Player

Acquire & Exploit

Growth

People - Skill Sets

4

Overview

Independent, domestic onshore E&P company, established 1979

Publicly traded on the NASDAQ National Market – “PLLL”– Equity market capitalization of approximately $130 million

Focused operations in three key areas– The Permian Basin of West Texas and New Mexico– North Texas (Fort Worth Basin)– The Onshore Gulf Coast area of South Texas

Substantial and diversified proved reserve base– 21.7 MMBOE proved reserves– $266.2 million SEC PV-10

Long life, 18.3 year proved R/P ratio and 13.8 year proved developed R/P ratio

5

Investment Considerations

Experienced technical team focused on accelerated production growth and reserve development

Excellent Industry Peer Comparisons

– F&D costs

– Full cycle economics

Balanced portfolio of long-life, high-quality assets

Significant re-investment opportunities in 5 active low-risk oil projects

Significant investment opportunities in 4 low-risk, technology-driven gas projects

Exposure to high impact exploration projects

Technology driven strategy to realize enhanced returns while minimizing risks

6

Management Team130 Years Combined Oil and Gas Experience

Larry OldhamPresident &

CEO

Don Tiffin, P.E.Chief Operating

Officer

John Rutherford, CPLVice PresidentLand & Admin

Eric Bayley, P.E. Vice President

Corp. Engineering

Steve Foster, CPAChief Financial

Officer

7

Technical and Operations125 Years Combined Oil and Gas Experience

Jerry NevansDirector Business

Development

Kerry Meise, P.E.Senior Engineer

Mike MoylettSenior Geologist

Brian McCurryManager of Operations

Bobby KuhlProduction

Superintendent

8

PLLL…a Growth Company!

100%

Production Reserve Volumes

575%

1,465%

Reserve Value

Since 2001

9

Production Growth. . . Since 2001

2,954

1,868

3,740

GAS 2,450

1,290

Boe per Day

OIL

Dec 04E

1,834

1,120

62%

38%

65%

35%

37820%

1,49080%

Dec 01

10

Reserve Volume Growth. . . Since 2001

3.2

21.7

GAS

MMBoe

OIL

11

Reserve Value Growth. . .Since 2001SEC PV-10

$17

$266

GAS

Millions of Dollars

OIL

12

2004 Operating Summary

13

Areas of Operations

Barnett Shale Gas ProjectAcquired April 2003

Utah ProjectAcquired June 2002

Fullerton San AndresAndrews Co.

Acquired December 2002

New Mexico Abo Gas ProjectAcquired April 2003

Carm-Ann / N Means QueenAndrews Co.

Acquired Oct & Dec 2004

Yegua/Frio GasJackson/Wharton Cos.

Acquired November 1994

Cook Mountain GasLiberty Co.

Acquired June 2002

Cotton Valley Project

Acquired Dec 2003

Diamond M FieldScurry Co.


Proved Reserves

21.7 MMBoe

71% Proved Developed

87% of Proved Reserves -Oil assets

90% Operational control

SEC PV10 = $266.2 Million

R/P Ratio = 18.3 Years

14

Reserves and Production by Area

21.7 MMBoe at December 31, 2004 3.74 MBoepd Current Estimate

Fullerton53%

New Mexico Abo0%

Diamond M Canyon Reef

6%

Carm-Ann/N Means Queen

12%

Diamond M Shallow

15%

Yegua/Frio5%

Cook Mountain0%

Other Permian Basin

9%

Proved Reserves Daily Production

15

Peer Comparisons

2001-2003 Reserve Replacement Costs - $ per BOE

Sources: Public company data; Global Upstream Performance Review, 2004, John S. Herold, Inc. and Harrison Lovegrove & Co.

$0

$5

$10

$15

$20

$25

DPTR PLLL DBLE MSSN EPEX BEXP CRZO XEC CWEI TXCO AXAS TMR

Small-cap U.S. average = $10.72

16

Peer Comparisons

2001-2003 Reserve Replacement Percentage


0%

100%

200%

300%

400%

500%

600%

700%

800%

DPTR PLLL DBLE MSSN TXCO EPEX BEXP CRZO XEC CWEI AXAS TMR

Small-cap U.S. average = 205%

17

Peer Comparisons

Full-cycle Economics: Per Unit Revenue Less Production Costs (including production related G&A) Divided by 3-Year Reserve Replacement Costs Per Unit


0%

50%

100%

150%

200%

250%

300%

350%

PLLL DPTR DBLE BEXP EPEX MSSN CRZO XEC CWEI TXCO CWEI AXAS TMR

Small-cap U.S. average = 211%

NM NM

18

Future Growth

Exploitation of PUD Reserve Inventory

– Fullerton, Diamond M, N. Means Queen and Carm-Ann Projects

– 2005 Estimated CAPEX - $22.2 million

Exploitation of Gas Projects

– New Mexico Abo and North Texas Barnett Shale


Exploration Projects

– Utah and East Texas Cotton Valley Reef


Acquisition Targets

– Long-life oil and/or gas reserves (R/P 15)

– Low-risk (POS >50%) and low-cost PUD reserves

– Accretive to earnings and cash flow

– Deal size - $1 million - $100 million

19

2005 Capital Investment Budget – $43.7 Million

Risk Dispersion ($Millions)

$15.2

$1.8

$14.8

$9.4 $2.5

90% Historic SuccessFullerton, Carm-Ann,Diamond M Shallow & Other Infill Drilling & Waterflood Implementation

Barnett Shale & New Mexico Gas Extension Wells

70+% Historic SuccessCook Mountain & Yegua Extension Wells

100% Historic SuccessDiamond M Canyon ReefDeepenings & Reactivations

New Projects

Geographic Dispersion ($Millions)

New Projects

Barnett Shale

New Mexico Abo Gas

Cook Mountain & Yegua

Fullerton

Diamond M Shallow

Carm-Ann / N. Means Queen

Other PermianBasin

Diamond M Canyon

20

Areas of Operations

Barnett Shale Gas ProjectAcquired April 2003

Utah ProjectAcquired June 2002

Fullerton San AndresAndrews Co.


New Mexico Abo Gas ProjectAcquired April 2003

Carm-Ann / N Means QueenAndrews Co.

Acquired Oct & Dec 2004

Yegua/Frio GasJackson/Wharton Cos.

Acquired November 1994

Cook Mountain GasLiberty Co.

Acquired June 2002

Cotton Valley Project

Acquired Dec 2003

Diamond M FieldScurry Co.


21

Fullerton San Andres

Project Attributes

– 3,640 gross acres

– San Andres - 4,400'

– Immature waterflood

– Shallow decline rate

– Long reserve life

Future Work

– 2005 budget is $3.7 million 13 new infill wells Waterflood enhancement Exploitation of Clearfork

Formation

22

Fullerton San Andres

Gross Daily Oil Production (Bopd)

Historical Projection

PLLL Acquired Dec. 2002

PLLL's Net Revenue Interest 71%

80+ workovers& 6 new wells

13 new wells

Development response associated with 2003 and 2004 capital activity

Projected development response associated with 2005 capital activity

23

Diamond M – Canyon Reef

Project Attributes


– Canyon Reef – 6,500’

– Significant original oil in place

– Prolific primary production

– Low recovery factor relative to offsets

Future Work

– 2005 budget is $9.4 million 24 well deepenings

and recompletions Additional 3D seismic data

acquisition 3 infill wells Waterflood enhancement

– Tertiary (CO2) enhancement

Diamond M43 Million Bbls

RF<30%1.25 Billion Bbls

RF >50%

201 Million BblsRF>50%

SACROC

Sharon Ridge

24

Diamond M – Canyon Reef

Gross Daily Production (Boepd)

Development response associated with 2003 and 2004 capital activityProjected development response associated with 2005 capital activity


PLLL's Net Revenue Interest ≅ 57%

4 workovers & 2 new wells

24 workovers & 3 new

wells

PLLL Assumed OperationsMarch 2003

25

Diamond M Shallow

Diamond M Shallow4.0 Million Bbls

Anadarko Activity

Anadarko Activity

Project Attributes

– 2,600 gross productive acres

– 2,450' - 4,000'

– Proven primary well performance

– Inefficient waterflood on 20-acre spacing

– Demonstrated successful 10-acre waterfloods to north and south

Future Work

– 2005 Budget is $5.0 million 15 infill wells 16 workovers

26

Diamond M Shallow

Gross Production Curve (Bopd)


Development response associated with 2003 and 2004 capital activity (excludes flood response)

Projected development response associated with 2005 capital activity (excludes flood response)

PLLL Assumed Operations March 2003

PLLL's Net Revenue Interest ≅ 57%


wells


wells

27

Carm-Ann San Andres / N. Means Queen

Project Attributes


– San Andres - 4,900' 40 acre well spacing on

primary depletion

– Queen - 4,300' Inefficient abandoned

waterflood

Future Work

– 2005 Budget is $4.1 million

– San Andres 9 infill wells Stimulation of existing wells Waterflood initiation

– Queen 4 infill wells Well reactivation Waterflood redevelopment

28

Carm-Ann San Andres / N. Means Queen

Gross Daily Production (Boepd)


PLLL Acquired Oct. 2004

PLLL's Net Revenue Interest 59%

24 workovers

& 13 new wells

Projected development response associated with 2005 capital activity

29

North Texas Barnett Shale Gas Project

Project Attributes

– 5,000 gross acres; 28-40% working interest

– First gas well drilled and awaitingcompletion

– Second well currently drilling

– Estimated pay of more than 250gross feet of Barnett Shale

Future Work

– 2005 budget is $7.6 million 7 horizontal wells Water frac completions Pipeline installation

30

Barnett Shale Development – 5 County Area

0

100

200

300

400

500

600

700

800

900

82 83 84 84 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Pro

du

cin

g W

ells

Wise Tarrant Parker J ohnson Denton(1) 8 months annualized

31

0

1000

2000

3000

4000

5000

6000

7000

Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04

MC

FP

DNorth Texas Barnett Shale GasXTO Energy - Brumbaugh No. 2 Horizontal Well - Average Daily Rate

PLLL owns no interest in this property

12 Months Cum1.36 BCF of gas

Initial Potential-7,000 Mcfg per Day

32

North Texas Barnett Shale

ERATH

HOODJOHNSON

PALO PINTO

PARKER

TARRANT

XTO Energy Acquisition of Antero• $685 million• 440 Bcfe - 41% proved developed• 60 MMcfepd - production• 61,000 acres• Tarrant, Parker & Johnson Counties JACK WISE DENTON

MONTAGUE COOKE

Ft. Worth

Cleburne

PLLLLeasehold

5,000 Acres

Newark East Field• 3,700 wells• 1.0 Bcfepd• Largest producing

gas field in Texas

Cleburne Field

Chesapeake Acquisition of Hallwood• $277 million• 135 Bcfe - 15% proved developed• 25 MMcfepd - production• 18,000 acres• Johnson County

Recently Announced Acquisitions

33

New Mexico Abo Gas Project

Project Attributes

– Technology driven gasdevelopment play

– Area 1 - 50,000 gross acres (4,250 net); 8.5% working interest

– Area 2 - 30,000 gross acres (25,500 net); 85.0% working interest

Future Work

– 2005 Budget is $7.6 million 3 re-entries 6 horizontal wells Fracture stimulation Pipeline installation

New Mexico

34

Best Vertical Abo Well

Initial Rate 1,450 Mcfg per Day

15 Year Cum.78 BCF of gas

PLLL owns no interest in this property

(

Average Daily Rate

35

First Abo Horizontal Producer – Area 1

0

500

1000

1500

2000

2500

3000

MC

FG

PD

6 Months Cum.356 BCF of gas

Initial Rate 2,300 Mcfg per DayArea 1 - PLLL's Net Revenue Interest ≅ 6.8%

Area 2 - PLLL's Net Revenue Interest ≅ 68.0%

Average Daily Rate

36

Other Projects

Utah CBM (Coal Bed Methane) Gas / Conventional Oil & Gas Projects

– 125,000 gross acres with both shallow gas and oil targets; 100% working interest

– First test well expected to spud in first half of 2005


East Texas Cotton Valley Reef Gas Project

– 5,000 gross acres; 13.125% working interest

– Existing long-life natural gas fields nearby with impressive production histories from similar reef facies


Financial Overview

38

AssetsCurrent assets 5.3$ 16.1$ 23.6$ 13.7$ Net property and equipment 29.8 85.7 94.0 129.0 Other assets, net 6.7 0.6 0.7 1.2

Total 41.8$ 102.4$ 118.3$ 143.9$

Liabilities and Stockholders' EquityCurrent liabilities 5.8$ 7.5$ 7.2$ 16.7$ Long-term debt, net 9.6 45.6 39.8 55.0 Deferred tax - 3.6 5.8 5.4 Derivative obligations - 0.1 2.7 9.3 Asset retirement obligations - - 1.6 1.8 Stockholders' equity 26.4 45.6 61.2 55.7

Total 41.8$ 102.4$ 118.3$ 143.9$

December 31,2002

December 31,2001

(unaudited)

September 30,2004

December 31,2003

Balance Sheet Data

Millions of Dollars

39

Statement of Operations

Oil and gas revenues 17.8$ 12.1$ 33.8$ 23.7$

Cost and expenses:

Lease operating expense 2.7 2.1 6.5 5.5

Production taxes 1.2 0.8 1.9 1.4

General and administrative 1.4 2.1 4.3 3.9

Depreciation and depletion 6.3 6.2 8.4 6.0

Impairment of oil and gas properties 16.8 - - -

Total costs and expenses 28.4 11.2 21.1 16.8

Other income (expense), net (0.2) 27.5 (2.0) (1.3)

Income (loss) before income taxes (10.8) 28.4 10.7 5.6

Income tax benefit (expense), deferred 6.1 (9.7) (3.1) (2.0)

Cumulative preferred stock dividend (0.6) (0.6) (0.6) (0.4)

Net income (loss) available tocommon stockholders (5.3)$ 18.1$ 7.0$ 3.2$

12 Months2001

12 Months2002

12 Months2003

9 Months2004Millions of Dollars

40

Oil Hedges and Prices

0

500

1,000

1,500

2,000

2,500

Current Oil

Production

2005 2006 2007 2008

BO

PD

2,450

1,900@

$30.80

700@

$39.96

1,200@

$25.56

1,421@

$30.80

500@

$36.36

921@

$25.56

1,300@

$34.36

1,200@

$33.37

41

Gas Hedges and Price

0

2,000

4,000

6,000

8,000

10,000

Current Gas Production 2005

MC

FGPD

7,800

1,700@

$4.91

42

Realized Oil and Gas Prices

1Q 04 2Q 04 3Q 04Oil per Bbl

NYMEX 35.14$ 38.30$ 43.85$ Differential (2.21) (2.64) (2.55)

Wellhead price 32.93$ 35.66$ 41.30$ Hedge payment (7.00) (9.16) (12.80) Realized Price 25.93$ 26.54$ 28.50$

Gas per McfNYMEX 5.68$ 6.18$ 5.72$

Differential (0.47) (0.24) (0.48) Wellhead price 5.21$ 5.94$ 5.24$ Hedge payment 0.03 (0.45) (0.49) Realized Price 5.24$ 5.45$ 4.75$

43

2 Year Stock Performance

$13 MM Equity PlacementDecember 23, 2003

Fulcrum ReportSept. 2, 2004

DE Investment ReportJuly 30, 2004

Jefferies ReportJune 3, 2004

Sterne, Agee & Leach ReportNov. 23, 2004

44

Investment Considerations

Experienced technical team focused on accelerated production growth and reserve development

Excellent Industry Peer Comparisons

– F&D costs

– Full cycle economics

Balanced portfolio of long-life, high-quality assets

Significant re-investment opportunities in 5 active low-risk oil projects

Significant investment opportunities in 4 low-risk, technology-driven gas projects

Exposure to high impact exploration projects

Technology driven strategy to realize enhanced returns while minimizing risks

45

Corporate Information

Cindy ThomasonManager Investor [email protected]

Steve FosterChief Financial [email protected]

Don TiffinChief Operating [email protected]

Larry OldhamPresident & [email protected]

Web sitehttp://www.plll.com

Common StockNasdaq: PLLL

Parallel Headquarters Contacts1004 N. Big Spring, Suite 400 Midland, TX 79701 (432) 684-3727

A Growth Company

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