Pyramid Oil Company Reports 26% Increase in Second Quarter Revenue

BAKERSFIELD, CA--(Marketwire - Aug 15, 2011) - Pyramid Oil Company (NYSE Amex: PDO)

Highlights:

• Second quarter net income improves to $427,000 vs. net loss of $302,000 in 2010 Q2
• EPS of $0.09 versus loss of $0.06 in Q2 last year
• Six-month operating cash flow up 65% to $1.2 million vs. same period in 2010
• Balance sheet includes cash, cash equivalents and short-term investments of $4.7 million, and nominal long-term debt

Pyramid Oil Company (NYSE Amex: PDO) today announced continued revenue and earnings growth for its second quarter and six-month period ended June 30, 2011.

Second quarter revenue increased 26% to $1.5 million from $1.2 million in the same quarter last year. The increase was due to higher average crude oil prices, which increased $34.76 per barrel of oil equivalent (BOE) to $108.79 from $74.03 per average BOE in the 2010 second quarter.

Operating income was $512,000, a positive swing of $1.1 million when compared with a loss from operations of $583,000 in last year's second quarter. The 2010 second quarter was negatively impacted by a non-cash valuation allowance of $842,000 associated with an unsuccessful well. Net income in this year's second quarter was $427,000, or $0.09 per share, an improvement of $729,000, when compared with a net loss of $302,000, or $0.06 per share, in the year-ago second quarter.

For the six-month period, revenue increased 29% to $2.9 million from $2.2 million in the same period last year. Operating income was $888,000, an improvement of $1.2 million when compared with an operating loss of $354,000 during the 2010 six-month period. Net income improved by $868,000 to $747,000, or $0.16 per share, from a net loss of $121,000, or $0.03 per share, during the same period last year.

Cash flow from operations at June 30 was $1.2 million, up 65% from $706,000 during the first six months of fiscal 2010. The Company's balance at June 30, 2011, included $4.7 million in cash, cash equivalents and short-term investments; total current assets of $5.8 million, and working capital of $5.3 million. Long-term debt was a nominal $52,000.

"Our second quarter and year-to-date financial results reflect both solid industry fundamentals and the benefits of our efficient business model," said John Alexander, president and CEO. "A 34% increase in the average price per barrel of oil versus last year's second quarter combined with our lean expense structure fueled strong bottom-line results."

"Despite recent market volatility, the oil sector remains healthy, and we therefore continue to focus on opportunities to increase our production volumes," Mr. Alexander added. "We are currently targeting up to four wells on our Kern County, California leases. Two would be re-entries of existing wells on our Mountain View property, and two would be shallow, heavy oil test wells on our Chico Martinez property. Of course contract rig availability remains very tight, and consequently, the timing of initiating these wells is challenging to pinpoint."

Mr. Alexander said the Company is continuing work on the production challenges associated with the Pike 1-H, a horizontal joint-venture well the Company drilled in March with Victory Oil Company. As previously reported, initial tests were encouraging, but the well has subsequently been generating significant volumes of water, which is believed to be inhibiting the flow of oil. The companies are consulting with outside industry experts and pursuing a variety of technical options to address this production issue.

"In the meantime, we have strong cash and working capital positions, and are free of long-term debt," Mr. Alexander said. "Given current market conditions, our priorities are to maintain the Company's financial strength, while also being mindful of opportunities to enhance shareholder value."

About Pyramid Oil Company
Pyramid Oil Company has been in the oil and gas business continuously since incorporating in 1909. Pyramid acquires interests in land and producing properties through acquisition and lease, and then drills and/or operates crude or natural gas wells in an effort to discover or produce oil and/or natural gas. More information about the Company can be found at: http://www.pyramidoil.com.

Safe Harbor Statement
Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995, including statements regarding the completion and testing of wells. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Factors that could cause or contribute to such differences include, but are not limited to the value of crude oil or the performance of wells.

PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
				Three months ended June 30,						Six months ended June 30,
				2011			2010			2011			2010
REVENUES:
	Oil and gas sales			$	1,549,029		$	1,228,391		$	2,875,327		$	2,230,130
	Gain on sale of fixed assets				0			0			1,012			0
				$	1,549,029		$	1,228,391		$	2,876,339		$	2,230,130
COSTS AND EXPENSES:
	Operating expenses				447,889			438,392			861,545			778,312
	General and administrative				219,072			250,588			443,792			457,955
	Stock based compensation				43,743			0			43,743			0
	Taxes, other than income and payroll taxes				27,104			29,839			63,959			57,659
	Provision for depletion, depreciation and amortization				225,895			196,873			411,423			346,260
	Valuation allowances				5,851			842,327			54,384			867,468
	Accretion expense				5,229			5,898			21,564			12,111
	Other costs and expenses				62,197			47,303			87,684			64,543
					1,036,980			1,811,220			1,988,094			2,584,308
OPERATING INCOME (LOSS)					512,049			-582,829			888,245			-354,178
OTHER INCOME (EXPENSE):
	Interest income				13,159			8,430			26,511			16,383
	Other income				0			3,600			500			6,397
	Interest expense				-385			-122			-1,891			-303
					12,774			11,908			25,120			22,477
INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT)					524,823			-570,921			913,365			-331,701
	Income tax provision (benefit)
		Current			64,400			24,900			110,600			44,900
		Deferred			33,400			-293,950			56,100			-255,400
					97,800			-269,050			166,700			-210,500
NET INCOME (LOSS)				$	427,023			-$301,871		$	746,665			-$121,201
BASIC INCOME (LOSS) PER COMMON SHARE					$0.09			-$0.06			$0.16			-$0.03
DILUTED INCOME (LOSS) PER COMMON SHARE					$0.09			-$0.06			$0.16			-$0.03
Weighted average number of common shares outstanding					4,683,853			4,677,728			4,681,811			4,677,728
Diluted average number of common shares outstanding					4,725,992			4,677,728			4,723,536			4,677,728

PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
					June 30,			December 31,
					2011			2010
					(Unaudited)			(Audited)
CURRENT ASSETS:
	Cash and cash equivalents				$	1,617,207		$	1,535,532
	Short-term investments					3,080,185			3,058,528
	Trade accounts receivable					599,410			508,457
	Joint interest billing receivable					68,674			0
	Crude oil inventory					86,205			86,361
	Prepaid expenses and other assets					112,604			230,876
	Deferred income taxes					262,500			245,100
			TOTAL CURRENT ASSETS			5,826,785			5,664,854
PROPERTY AND EQUIPMENT, at cost
	Oil and gas properties and equipment (successful efforts method)					19,102,006			18,101,529
	Capitalized asset retirement costs					401,242			389,463
	Drilling and operating equipment					1,953,683			1,946,805
	Land, buildings and improvements					1,073,918			1,066,571
	Automotive, office and other property and equipment					1,226,301			1,182,613
						23,757,150			22,686,981
	Less: accumulated depletion, depreciation, amortization and valuation allowances					-19,118,315			-18,687,908
	TOTAL PROPERTY AND EQUIPMENT					4,638,835			3,999,073
OTHER ASSETS
	Deferred income taxes					635,000			708,500
	Deposits					250,000			250,000
	Other Assets					17,380			7,380
	TOTAL OTHER ASSETS					902,380			965,880
		TOTAL ASSETS			$	11,368,000		$	10,629,807

PYRAMID OIL COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
					June 30,			December 31,
					2011			2010
					(Unaudited)			(Audited)
CURRENT LIABILITIES:
	Accounts payable				$	90,486		$	73,374
	Accrued professional fees					88,049			122,506
	Accrued taxes, other than income taxes					0			63,361
	Accrued payroll and related costs					67,880			60,365
	Accrued royalties payable					213,969			193,052
	Accrued insurance					11,484			86,888
	Accrued income taxes					11,600			12,800
	Current maturities of long-term debt					31,793			13,473
			TOTAL CURRENT LIABILITIES			515,261			625,819
LONG TERM DEBT, net of current maturites						51,946			26,946
LIABILITY FOR ASSET RETIREMENT OBLIGATIONS						1,268,536			1,235,193
			TOTAL LIABILITIES			1,835,743			1,887,958
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
	Preferred stock-no par value; 10,000,000 authorized shares; no shares issued or outstanding					0			0
	Common stock-no par value; 50,000,000 authorized shares; 4,683,853 shares issued and outstanding					1,682,971			1,639,228
	Retained earnings					7,849,286			7,102,621
			TOTAL STOCKHOLDERS' EQUITY			9,532,257			8,741,849
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	11,368,000		$	10,629,807