Pyramid Petroleum Inc.

Pyramid Petroleum Inc.

September 19, 2007 10:07 ET

Pyramid Petroleum Announces Change in Its Plan of Business Combination With Capco Energy

CALGARY, ALBERTA--(Marketwire - Sept. 19, 2007) - Pyramid Petroleum, Inc. ("Pyramid") (TSX VENTURE:PYR) announced today that it has terminated its plan to merge with Capco Energy, Inc. ("Capco"), a company controlled by Mr. Ilyas Chaudhary, the CEO and major shareholder of Pyramid, as announced on June 8, 2007 and instead has entered into a Purchase and Sale Agreement for purchase of a wholly-owned subsidiary ("Company") of Capco. With this acquisition, Pyramid's interest in certain of its Gulf of Mexico ("GOM") properties will increase from 5% to 29%. The original 5% interest was purchased in August 2006. The Company has a staff of qualified professionals and will continue to manage its operations in the GOM as well as Pyramid's other assets in the GOM.

The negotiated contract purchase price is US$ 11.0 million. Pyramid has received an independent NI 51-101 compliant engineering report for the properties owned by the Company as conducted by Haas Petroleum effective December 31, 2006. Pyramid has paid a deposit of $200,000 and will get credit for net operating revenue since January 1, 2007 to closing and for working capital at closing. The balance of the payment, due at closing, is estimated to be approximately US$6 million. The closing is expected within 60 days and is subject to various conditions, including Pyramid successfully arranging bank financing for the balance of the purchase price, receipt of audited financial statements of the Company and regulatory approval.

The Company to be acquired has current production of 1.6 million cubic feet per day (Mmcf/d) of natural gas and 50 barrels of oil per day (bopd) for a total production of 317 barrels of oil equivalent per day (boed). Pyramid has current production of 5.9 Mmcf/d and 505 bopd for a total of 1,496 boed. Upon completion of the acquisition the combined production of Pyramid is estimated to be 1,813 boed.


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.

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. 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.

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

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