Pyramid Petroleum Inc.

Pyramid Petroleum Inc.

September 06, 2007 08:49 ET

Pyramid Petroleum Announcing Second Quarter Results and Other Updates

CALGARY, ALBERTA--(Marketwire - Sept. 6, 2007) -


Pyramid Petroleum, Inc. (TSX VENTURE:PYR) announced today the results of 2nd quarter operations and other updates. The Company's 2007 2nd quarter financial statements and associated management's discussion and analysis can be found online at Effective April 1, 2007 the Company has changed its functional and reporting currency to United States dollar and all the amounts provided herein are in U.S. dollars.


- Revenues, net of royalties, for the Q2, 2007 were $3,216,614 million compared to $208,137 for Q2, 2006. The increase is primarily due to additional assets (the "Assets") acquired on April 1, 2007 and May 17, 2007 in the Gulf of Mexico. This acquisition is being reviewed by TSXV.

- Funds from operations for the Q2, 2007 were $1,733,925 compared to $37,653 for Q2, 2006.

- Net income for the Q2, 2007 was $549,051 compared to a net loss of $113,508 for Q2, 2006

- During Q2 2007 the Company purchased 50% of the membership shares ("Membership Shares") in a Limited Liability Company (the "LLC") in two tranches of 20% on April 3, 2007 and 30% on May 17, 2007. The LLC acquired the Assets from an arms length party (the "Seller"). A company controlled by an Officer and Director of Pyramid acted as an agent and retained an option for a period of one year to acquire 3.5% Membership Shares at Pyramid's cost. Pyramid paid $1.0 million in cash for the purchase of the Membership Shares and the remaining closing balance of $22.5 million, as detailed below, was funded through debt from an arms-length third party and production credits from the effective date of September 1st, 2006. The debt is serviced from 80% of the net operating cash flow from the properties, is due in full if the Assets are sold, and carries an interest rate of 10% per annum. The Membership Shares are pledged to the lender as security.

- During Q2, 2007 the LLC participated in the drilling of two wells and the tie-in of one other well in the Gulf of Mexico. The LLC owns a 25% working interest in these wells. All three wells are producing and the combined current production from these wells, net to LLC, is 8,750 Mcf/d and 56 bopd. Pyramid's beneficial interest is 50% of this production, or 4,375 Mcf/d and 28 bopd.

- The Company drilled a well in Hays, Alberta during the Q2, 2007. The well is cased and is waiting on testing of a potential gas zone. Tests were done earlier for an oil zone, but didn't result in establishing commercial quantities. Pyramid owns a 90% working interest in this well.


- Pyramid has terminated its investor relations agreement with MarketSmart Communications Inc.

- The Company wishes to provide further details, with regards to the purchase of the Membership Shares of the LLC. The following describes the breakdown of transaction cost and funding sources:

The contract purchase price of $17.5 million, cash collateral of $4.7 million for certain plugging and abandonment bonds, and closing cost of $0.3 million were funded by production credits of $6.3 million since the effective date of September 1, 2006, a cash payment of $1 million, deferred payments to the Seller in the amount of $2.5 million, of which $1.25 million is subsequently paid and the balance is due on March 31, 2008, and debt of $12.7 million as detailed above.

Further information about this transaction can be reviewed in the second quarter 2007 financial statements, as filed on Sedar.


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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