SOURCE: Capco Energy, Inc.

June 11, 2007 14:34 ET

Pyramid Petroleum and Capco Energy Announce Plan for Business Combination

CALGARY, AB and HOUSTON, TX--(Marketwire - June 11, 2007) - Pyramid Petroleum Inc. ("Pyramid" or the "Company") and Capco Energy, Inc. (PINKSHEETS: CGYN) ("Capco") announced today that their respective boards of directors have approved the execution of a Letter of Intent whereby Pyramid would acquire all of the outstanding common shares of Capco in exchange for common shares of Pyramid ("Common Shares"), as a result of which Capco will be a wholly owned subsidiary of Pyramid. The number of Common Shares to be issued will be based upon the net asset value ("NAV") of Pyramid and Capco, determined by, among other factors, the discounted NAV of the oil and gas reserves of each company.

An independent committee will select an independent third-party appraiser to provide a fairness opinion on the transaction. Both companies have agreed to abide by the results of this opinion. The completion of this business combination will be subject to all necessary documentation, due diligence, and regulatory and shareholder approvals.

Capco is currently trading on the pink sheets in the US, but has not filed current financial information with the appropriate regulatory authorities. It anticipates that financial statements for the period ending December 31, 2006 and March 31, 2007 will be completed and filed within two to three months. A follow-up press release will be issued at that time. Capco's reserve report as of December 31, 2006 is not prepared in accordance with NI 51-101 guidelines and such evaluation is being conducted currently and the results will be announced in a follow-up press release.

Due diligence by both parties is on-going, and this transaction will be subject to disinterested shareholder approval and review by the TSX Venture Exchange. There is no assurance that the Exchange will accept the proposed transaction, the disinterested shareholders will approve it, or that both companies will be satisfied with their due diligence results.

Mr. Ilyas Chaudhary, the majority shareholder in both companies, as well as being the CEO of both companies, will not participate in the selection of the third-party appraiser for the transaction, nor will he vote on any issue concerning this transaction. No other Capco directors have been identified at this time to join the board of Pyramid.

Following the transaction, Pyramid is expected to have the following key characteristics:

--  Operation of approximately 125 wells in the Gulf of Mexico.
--  Ownership of producing onshore oil and gas assets in Texas, Montana
    and Alberta.
--  A net undeveloped land position of 82,000 acres in various prolific
--  Certain Gulf of Mexico prospects developed with 3-D seismic
    interpretation being marketed for exploratory drilling purposes.
--  Primary business headquarters will be in Houston, Texas.
Following the acquisition, Pyramid expects to raise funds to expand the oil and gas production of the combined company, mainly in the Gulf of Mexico, focusing on low-risk producing opportunities.


Use of the term barrels of oil equivalent ("boe") or thousands of cubic feet of gas equivalent ("Mcfe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The TSX Venture Exchange has neither approved nor disapproved of the contents hereof.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Except for statements of historical fact, all statements in this press release, without limitation, regarding new projects and future plans and objectives are forward-looking statements which involve risks and uncertainties, including uncertainty regarding future revenue and integration. These and other risks are identified in our SEC filings and should be considered in evaluating the forward-looking statements made herein. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. These risks could cause actual financial results to vary from those anticipated.

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