Pyramid Oil Company Reports 47% Increase in Oil & Gas Revenue for Fiscal 2008

Full-Year Operating Cash Flow Increases 129% to $3.6 Million; Company Ends Year With $4.6 Million in Cash and Short-Term Investments

BAKERSFIELD, CA -- (Marketwire) -- 04/01/09 -- Pyramid Oil Company (AMEX: PDO) today announced financial results for its full year and fourth quarter ended December 31, 2008.

Full-year oil and gas revenue increased 47% to $6.6 million versus $4.5 million in 2007. The increase was largely the result of higher average oil and gas prices, which increased by $26.16 per equivalent barrel of oil versus 2007. Total revenue increased 34% to $6.6 million versus $4.9 million in 2007, when the Company recognized a $442,000 gain on the sale of fixed assets.

Operating expenses in 2008 increased by 21% to $1.9 million versus $1.6 million in the prior year. Total costs and expenses in 2008 were $5.5 million and included a non-cash impairment reserve of $1.2 million. Total costs and expenses in 2007 were $3.2 million.

Income from operations for 2008 was $1.1 million versus $1.8 million in 2007. Full-year net income, which included $305,000 in income tax benefits, was flat at $1.5 million, or $0.32 per diluted share, versus net income of $1.5 million, or $0.32 per diluted share, in 2007.

Full-year cash flow from operations increased 129% to $3.6 million versus $1.6 million in 2007. Pyramid ended fiscal 2008 with cash and short-term investments of $4.6 million, a net increase of $2.5 million, or 118%, versus December 31, 2007. At the end of 2008, the Company had working capital of $4.4 million, long-term debt of $21,000, and total stockholders' equity of $8.4 million.

For the fourth fiscal quarter, oil and gas sales were $898,000 versus $1.4 million in the 2007 fourth quarter. The average oil and gas price during the quarter declined by $32.64 per equivalent barrel versus the fourth quarter of 2007. Operating expenses were $509,000 versus $422,000 in the 2007 fourth quarter, while total costs and expenses, including the previously mentioned non-cash impairment reserve charges, were $2.6 million versus $805,000 in the 2007 fourth quarter. The Company recorded a fourth quarter operating loss of $1.7 million versus operating income of $594,000 in the comparable 2007 fourth quarter. Net loss was $933,000, or $0.20 per diluted share, versus net income of $427,000, or $0.09 per diluted share, in the same quarter a year ago.

John Alexander, president and CEO, said, "Pyramid achieved strong top-line growth during fiscal 2008, and despite the widespread asset impairment charges that resulted from the collapse in energy prices and impacted most companies in our industry, we still delivered solid bottom-line results for our stockholders."

Mr. Alexander added, "We significantly enhanced Pyramid's financial strength during the past year, and believe we are well prepared to endure the headwinds that are impacting our industry and the economy as a whole. We also believe that during the coming months, there will be an expanding range of opportunities to acquire oil and gas assets at much more attractive valuations than have been seen in several years."

In addition to its core California operations, Pyramid continues to participate in a natural gas joint venture in McMullen County, Texas. The JV recently re-entered an abandoned well that was originally drilled in the 1960s and showed favorable test results in several intervals. Due to low gas prices and lack of a sales pipeline, the original well was abandoned. The JV has been performing a series of improvement operations on the well, and once they are complete, the targeted gas zones will be perforated, tested and put on production. The Company expects these efforts to be complete by mid April.

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

                               Three months ended     Twelve months ended
                                  December 31,           December 31,
                            ----------------------- -----------------------
                               2008        2007        2008        2007
                            ----------- ----------- ----------- -----------

REVENUES:
  Oil and gas sales         $   898,427 $ 1,397,822 $ 6,610,628 $ 4,502,855
  Gain on sale of fixed
   assets                             0       1,454         500     441,927
                            ----------- ----------- ----------- -----------
                                898,427   1,399,276   6,611,128   4,944,782
                            ----------- ----------- ----------- -----------
COSTS AND EXPENSES:
  Operating expenses            508,614     422,055   1,941,888   1,611,269
  Exploration costs                   0           0     -28,812       6,687
  General and
   administrative               428,832     208,132   1,169,191     924,746
  Taxes, other than income
   and payroll taxes             32,124      32,997     131,215     111,909
  Provision for depletion,
   depreciation and
   amortization                 420,924     128,251     944,168     460,804
  Valuation allowances        1,162,379       3,324   1,162,379       3,324
  Accretion expense               2,364       5,548      68,832      22,135
  Other costs and expenses       26,875       5,177     128,090      36,818
                            ----------- ----------- ----------- -----------
                              2,582,112     805,484   5,516,951   3,177,692
                            ----------- ----------- ----------- -----------
OPERATING INCOME             -1,683,685     593,792   1,094,177   1,767,090
                            ----------- ----------- ----------- -----------

OTHER INCOME (EXPENSE):
  Interest income                24,120      21,950      88,792      85,003
  Other income                    4,400       3,600      28,431      19,886
  Interest expense                 -472         104      -2,235      -1,768
                            ----------- ----------- ----------- -----------
                                 28,048      25,654     114,988     103,121
                            ----------- ----------- ----------- -----------
INCOME BEFORE INCOME
 TAX PROVISION               -1,655,637     619,446   1,209,165   1,870,211
  Income tax provision
   (benefit)
    Current                      73,458     192,075     312,710     375,150
    Deferred                   -796,245           0    -617,245           0
                            ----------- ----------- ----------- -----------
                               -722,787     192,075    -304,535     375,150
                            ----------- ----------- ----------- -----------
NET INCOME                  $  -932,850 $   427,371 $ 1,513,700 $ 1,495,061
                            =========== =========== =========== ===========
EARNINGS  PER COMMON SHARE
  Basic income per common
   share                    $     -0.20 $      0.09 $      0.32 $      0.32
                            =========== =========== =========== ===========
  Diluted income per
   common share             $     -0.20 $      0.09 $      0.32 $      0.32
                            =========== =========== =========== ===========

Weighted average number
 of common shares
 outstanding                  4,677,728   4,677,728   4,677,728   4,677,728
                            =========== =========== =========== ===========
Diluted average number of
 common shares outstanding    4,713,055   4,677,728   4,713,055   4,677,728
                            =========== =========== =========== ===========




                            Pyramid Oil Company
                               BALANCE SHEETS

                                  ASSETS

                                                  December 31, December 31,
                                                      2008         2007
                                                  (Unaudited)   (Audited)
                                                  ------------ ------------

CURRENT ASSETS:
  Cash                                            $  1,793,563 $    618,448
  Short-term investments                             2,789,099    1,478,979
  Trade accounts receivable                            213,588      643,340
  Crude oil inventory                                   82,025       71,298
  Deferred income taxes                                108,000            0
  Prepaid expenses and other assets                    186,353      173,164
                                                  ------------ ------------

      TOTAL CURRENT ASSETS                           5,172,628    2,985,229
                                                  ------------ ------------

PROPERTY AND EQUIPMENT, at cost
  Oil and gas properties and equipment
   (successful efforts method)                      15,755,472   14,734,929
  Capitalized asset retirement costs                   382,550      310,579
  Drilling and operating equipment                   2,109,993    2,050,556
  Land, buildings and improvements                   1,065,371    1,010,847
  Automotive, office and other property and
   equipment                                         1,162,324    1,141,451
                                                  ------------ ------------

                                                    20,475,710   19,248,362
  Less: accumulated depletion, depreciation,
   amortization and valuation allowance            -16,147,157  -14,040,610
                                                  ------------ ------------

                                                     4,328,553    5,207,752
                                                  ------------ ------------
OTHER ASSETS
  Deposits                                             250,000      250,000
  Deferred income taxes                                509,245            0
  Other Assets                                          17,013       17,013

                                                  ------------ ------------

                                                  $ 10,277,439 $  8,459,994
                                                  ============ ============




                            Pyramid Oil Company
                               BALANCE SHEETS

                     LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  December, 31 December 31,
                                                      2008         2007
                                                  (Unaudited)   (Audited)
                                                  ------------ ------------

CURRENT LIABILITIES:
  Accounts payable                                $     40,820 $    108,500
  Accrued professional fees                            130,261       54,165
  Accrued taxes, other than income taxes                76,222       61,684
  Accrued payroll and related costs                     50,451       57,647
  Accrued royalties payable                            132,472      212,916
  Accrued insurance                                     59,096       65,999
  Accrued income taxes                                 239,815      145,815
  Current maturities of long-term debt                  23,901       26,868
                                                  ------------ ------------

      TOTAL CURRENT LIABILITIES                        753,038      733,594
                                                  ------------ ------------

LONG-TERM DEBT, net of current maturities               20,640       44,542
                                                  ------------ ------------

DEFERRED TAXES                                               0            0
                                                  ------------ ------------

LIABILITY FOR SHARE BASED COMPENSATION                       0       67,000
                                                  ------------ ------------

LIABILITY FOR ASSET RETIREMENT OBLIGATION            1,151,706    1,010,903
                                                  ------------ ------------

COMMITMENTS

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;
   4,677,728 shares issued and
   outstanding                                       1,306,010    1,071,610
  Retained earnings                                  7,046,045    5,532,345
                                                  ------------ ------------

                                                     8,352,055    6,603,955
                                                  ------------ ------------

                                                  $ 10,277,439 $  8,459,994
                                                  ============ ============