Pyramid Oil Company (PDO) Reports Strong Improvements in First Quarter Revenue and Earnings

Pyramid Oil Company (NYSE Amex: PDO) today announced financial results for its first quarter ended March 31, 2011.

Revenue increased 33% to $1.3 million from $1.0 million in the first quarter last year. The increase was largely attributable to higher average crude oil prices, which increased $21.57 per barrel of oil equivalent (BOE) to $97.12 from $75.55 per average BOE in the 2010 first quarter. Revenue also benefitted from a 3% increase in production volumes during the quarter.

Operating income increased 65% to $376,000 from $229,000 in last year’s first quarter. Operating margin in the first quarter was 28%, up from 23% in the comparable year-ago quarter. Net income improved 77% to $320,000, or $0.07 per share, from $181,000, or $0.04 per share, in the comparable year-ago quarter.

Pyramid generated operating cash flow of $1.4 million, up sharply from $176,000 during the first three months of fiscal 2010. At March 31, 2011, the Company’s balance sheet included $4.9 million in cash, cash equivalents and short-term investments; total current assets of $6.3 million and working capital of $4.5 million.

“Our first quarter financial performance reflects the benefits of a strong price environment and our lean cost structure,” said John Alexander, president and CEO. “During the quarter we maintained our focus on increasing production volumes in an effort to capitalize on our strong business model.”

“Much of our attention was devoted to drilling operations on the Pike 1-H, our first Joint Venture well with Victory Oil Company. We received very encouraging test results during the drilling operations on this horizontal well, and moved in a pumping unit as we prepared to put it into production. However, in the weeks following completion, the well has generated significant water volumes, and we believe this has interrupted the initial flow of oil. We are currently working with several outside consultants in hopes of identifying and overcoming these technical issues.”

Mr. Alexander said the Company has established a roster of additional drilling targets on its core properties in Kern County, California, and plans to drill up to two sidetrack wells and one potential new well during the latter half of the year. “Given the tight supply of contract rigs, we anticipate drilling on our next well will commence sometime this fall. In the meantime, we will continue to evaluate projects and opportunities that could accelerate our growth and 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 March 31,
                                                  2011            2010
                                             --------------  --------------

REVENUES:
  Oil and gas sales                          $    1,326,298  $    1,001,739
  Gain on sale of fixed assets                        1,012               0
                                             --------------  --------------

                                                  1,327,310       1,001,739
                                             --------------  --------------

COSTS AND EXPENSES:
  Operating expenses                                413,656         339,920
  General and administrative                        224,720         207,367
  Taxes, other than income and payroll taxes         36,855          27,820
  Provision for depletion, depreciation and
   amortization                                     185,528         149,387
  Valuation allowances                               48,533          25,141
  Accretion expense                                  16,335           6,213
  Other costs and expenses                           25,487          17,240
                                             --------------  --------------

                                                    951,114         773,088
                                             --------------  --------------

OPERATING INCOME                                    376,196         228,651
                                             --------------  --------------

OTHER INCOME (EXPENSE):
  Interest income                                    13,352           7,953
  Other income                                          500           2,797
  Interest expense                                   (1,506)           (181)
                                             --------------  --------------

                                                     12,346          10,569
                                             --------------  --------------

INCOME BEFORE INCOME TAX PROVISION                  388,542         239,220
  Income tax provision
    Current                                          46,200          20,000
    Deferred                                         22,700          38,550
                                             --------------  --------------
                                                     68,900          58,550
                                             --------------  --------------

NET INCOME                                   $      319,642  $      180,670
                                             ==============  ==============

BASIC INCOME PER COMMON SHARE                $         0.07  $         0.04
                                             ==============  ==============

DILUTED INCOME PER COMMON SHARE              $         0.07  $         0.04
                                             ==============  ==============

Weighted average number of common shares
 outstanding                                      4,679,770       4,677,728
                                             ==============  ==============

Diluted average number of common shares
 outstanding                                      4,687,030       4,686,018
                                             ==============  ==============

                            PYRAMID OIL COMPANY
                               BALANCE SHEETS

                                   ASSETS

                                                March 31,     December 31,
                                                  2011            2010
                                               (Unaudited)      (Audited)
                                             --------------  --------------

CURRENT ASSETS:
  Cash and cash equivalents                  $    1,841,418  $    1,535,532
  Short-term investments                          3,069,270       3,058,528
  Trade accounts receivable (net of reserve
   for doubtful accounts of $4,000 in 2011
   and 2010)                                        629,833         508,457
  Joint interest billing receivable                 192,433              --
  Crude oil inventory                                95,736          86,361
  Prepaid expenses and other assets                 195,098         230,876
  Deferred income taxes                             245,100         245,100
                                             --------------  --------------

    TOTAL CURRENT ASSETS                          6,268,888       5,664,854
                                             --------------  --------------

PROPERTY AND EQUIPMENT, at cost:
  Oil and gas properties and equipment
   (successful efforts method)                   19,219,961      18,101,529
  Capitalized asset retirement costs                389,463         389,463
  Drilling and operating equipment                1,946,805       1,946,805
  Land, buildings and improvements                1,073,918       1,066,571
  Automotive, office and other property and
   equipment                                      1,195,396       1,182,613
                                             --------------  --------------

                                                 23,825,543      22,686,981
  Less: accumulated depletion, depreciation,
   amortization and valuation allowance         (18,886,570)    (18,687,908)
                                             --------------  --------------

  TOTAL PROPERTY AND EQUIPMENT                    4,938,973       3,999,073
                                             --------------  --------------

OTHER ASSETS
  Deferred income taxes                             685,800         708,500
  Deposits                                          250,000         250,000
  Other Assets                                       17,380           7,380
                                             --------------  --------------

  TOTAL OTHER ASSETS                                953,180         965,880
                                             --------------  --------------

    TOTAL ASSETS                             $   12,161,041  $   10,629,807
                                             ==============  ==============

                            PYRAMID OIL COMPANY
                               BALANCE SHEETS

                    LIABILITIES AND STOCKHOLDERS' EQUITY

                                                March 31,     December 31,
                                                  2011            2010
                                               (Unaudited)      (Audited)
                                             --------------  --------------

CURRENT LIABILITIES:
  Accounts payable                           $    1,200,689  $       73,374
  Accrued professional fees                          98,235         122,506
  Accrued taxes, other than income taxes             61,701          63,361
  Accrued payroll and related costs                  78,562          60,365
  Accrued royalties payable                         211,390         193,052
  Accrued insurance                                  46,840          86,888
  Accrued income taxes                               59,000          12,800
  Current maturities of long-term debt               31,660          13,473
                                             --------------  --------------

    TOTAL CURRENT LIABILITIES                     1,788,077         625,819
                                             --------------  --------------

LONG TERM DEBT, net of current maturites             59,944          26,946
                                             --------------  --------------

LIABILITY FOR ASSET RETIREMENT OBLIGATIONS        1,251,528       1,235,193
                                             --------------  --------------

    TOTAL LIABILITIES                             3,099,549       1,887,958
                                             --------------  --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred stock-no par value; 10,000,000
   authorized shares; no shares issued or
   outstanding                                           --              --
  Common stock-no par value; 50,000,000
   authorized shares; 4,683,853 shares
   issued and outstanding                         1,639,228       1,639,228
  Retained earnings                               7,422,264       7,102,621
                                             --------------  --------------

    TOTAL STOCKHOLDERS' EQUITY                    9,061,492       8,741,849
                                             --------------  --------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   12,161,041  $   10,629,807
                                             ==============  ==============

CONTACTS:
John H. Alexander
President and CEO
Pyramid Oil Company
661-325-1000

Geoff High
Principal
Pfeiffer High Investor Relations, Inc.
303-393-7044