1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2006
OR
/ / Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 0-5525
PYRAMID OIL COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0787340
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2008 - 21ST. STREET,
BAKERSFIELD, CALIFORNIA 93301
(Address of principal executive offices) (Zip Code)
(661) 325-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
COMMON STOCK WITHOUT PAR VALUE 2,494,430
(Class) (Outstanding at March 31, 2006)
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FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
ASSETS
March 31, December 31,
2006 2005
(Unaudited) (Audited)
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 525,277 $1,300,475
Short-term investments 1,350,000 1,350,000
Trade accounts receivable 372,157 327,173
Interest receivable 95,161 91,717
Employee loan receivable 9,401 8,015
Crude oil inventory 42,200 58,962
Prepaid expenses 100,882 120,367
Deferred income taxes 60,954 60,954
------------ ------------
TOTAL CURRENT ASSETS 2,556,032 3,317,663
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Oil and gas properties and equipment
(successful efforts method) 12,625,389 11,505,375
Capitalized asset retirement costs 294,600 294,600
Drilling and operating equipment 1,952,242 1,945,882
Land, buildings and improvements 976,965 976,965
Automotive, office and other
property and equipment 1,019,170 961,902
------------ ------------
16,868,366 15,684,724
Less: accumulated depletion,
depreciation, amortization
and valuation allowance (13,368,016) (13,307,424)
------------ ------------
3,500,350 2,377,300
------------ ------------
OTHER ASSETS
Deposits 250,000 250,000
Other assets 12,869 13,178
Assets held for resale 9,633 9,633
------------ ------------
$6,328,884 $5,967,774
============ ============
The Accompanying Notes are an Integral Part of These Financial Statements.
3
PYRAMID OIL COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31 December 31,
2006 2005
(Unaudited) (Audited)
------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 115,070 $ 83,749
Accrued professional fees 49,476 51,741
Accrued taxes, other than income taxes 29,151 29,151
Accrued payroll and related costs 52,004 51,039
Accrued royalties payable 121,796 115,762
Accrued insurance 36,551 54,826
Accrued income taxes 92,350 54,050
Accrued termination costs 145,050 146,047
Current maturities of long-term debt 44,318 37,073
Deferred income taxes 60,954 60,954
------------ ------------
TOTAL CURRENT LIABILITIES 746,720 684,392
------------ ------------
LONG-TERM DEBT, net of current maturities 42,228 26,858
------------ ------------
LIABILITY FOR TERMINATION COSTS 141,333 141,333
------------ ------------
LIABILITY FOR ASSET RETIREMENT OBLIGATION 959,978 955,169
------------ ------------
COMMITMENTS (note 3)
STOCKHOLDERS' EQUITY:
Common stock-no par value;
10,000,000 authorized shares;
2,494,430 shares issued and
outstanding 1,071,610 1,071,610
Retained earnings 3,367,015 3,088,412
------------ ------------
4,438,625 4,160,022
------------ ------------
$6,328,884 $5,967,774
============ ============
The Accompanying Notes are an Integral Part of These Financial Statements.
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PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
---------------------------
2006 2005
------------ ------------
REVENUES $912,211 $701,892
------------ ------------
COSTS AND EXPENSES:
Operating expenses 344,500 318,605
General and administrative 116,377 101,181
Taxes, other than income
and payroll taxes 17,347 11,583
Provision for depletion,
depreciation and amortization 60,592 56,530
Accretion expense 4,809 4,545
Other costs and expenses 8,458 3,656
------------ ------------
552,083 496,100
------------ ------------
OPERATING INCOME 360,128 205,792
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 6,918 5,652
Other income 3,600 3,600
Interest expense (218) (342)
------------ ------------
10,300 8,910
------------ ------------
INCOME BEFORE INCOME
TAX PROVISION 370,428 214,702
Income tax provision 91,825 325
------------ ------------
NET INCOME 278,603 214,377
============ ============
EARNINGS PER COMMON SHARE
Basic Income Per Common Share $ 0.11 $ 0.09
============ ============
Diluted Income Per Common Share $ 0.11 $ 0.09
============ ============
Weighted average number of
common shares outstanding 2,494,430 2,494,430
============ ============
The Accompanying Notes are an Integral Part of These Financial Statements.
5
PYRAMID OIL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
2006 2005
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 278,603 $ 214,377
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Provision for depletion,
depreciation and amortization 60,592 56,530
Costs charged to asset retirement obligation -- (10,635)
Accretion expense 4,809 4,545
Changes in assets and liabilities:
Increase in trade accounts
and interest receivable (48,428) (101,186)
Decrease (increase) in
crude oil inventories 16,762 ( 2,269)
Decrease in prepaid expenses 19,485 27,581
Increase (Decrease) in accounts payable
and accrued liabilities 55,083 (153,510)
--------- ---------
Net cash provided by operating activities 386,906 35,433
--------- ---------
The Accompanying Notes are an Integral Part of These Financial Statements.
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PYRAMID OIL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
2006 2005
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $(1,183,642) $ (75,039)
Increase in other deposits (1,380) --
---------- ---------
Net cash used in investing activities (1,185,022) (75,039)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (9,778) (12,649)
Proceed from issuance of long-term debt 32,393 --
Loans to employees (3,000) --
Principal payments from loans to employees 3,303 2,937
---------- ---------
Net cash provided by (used in)
financing activities 22,918 ( 9,712)
---------- ---------
Net decrease in cash (775,198) (49,318)
Cash at beginning of period 1,300,475 816,216
---------- ---------
Cash at end of period $ 525,277 $766,898
========== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the three months for interest $ 218 $ 342
========= =========
Cash paid during the three months for income taxes $53,325 $ 325
========= =========
The Accompanying Notes are an Integral Part of These Financial Statements.
7 PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements include the accounts of Pyramid Oil Company (the
Company). Such financial statements included herein have been prepared by the
Company, without an audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
A summary of the Company's significant accounting policies is contained in its
December 31, 2005 Form 10-KSB which is incorporated herein by reference. The
financial data presented herein should be read in conjunction with the
Company's December 31, 2005 financial statements and notes thereto, contained
in the Company's Form 10-KSB.
In the opinion of the Company, the unaudited financial statements, contained
herein, include all adjustments necessary to present fairly the Company's
financial position as of March 31, 2006 and the results of its operations and
its cash flows for the three month periods ended March 31, 2006 and 2005. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
(2) DIVIDENDS
No cash dividends were paid during the three months ended March 31, 2006 and
2005.
(3) COMMITMENTS
The Company has entered into an employment agreement with the President of the
Company, John H. Alexander. In the event that Mr. Alexander is dismissed, the
Company would incur approximately $500,000 in costs.
(4) INCOME TAX PROVISION
The Company's income tax provision consists primarily of current taxes for
Federal and California estimated income taxes.
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(5) CHANGE IN ACCOUNTING PRINCIPLE
In accordance with Statement of Financial Accounting Standards No. 143,
''Accounting for Assets Retirement Obligations'', effective January 1, 2003,
the Company changed its method of accounting for asset retirement obligations
(ARO) relating to well abandonment costs from expensing such costs in the year
the wells are abandoned to recording a liability when such costs are incurred
in order to provide a better matching of revenue and expenses and to improve
interim financial reporting.
Upon adoption of SFAS 143, the Company was required to recognize a liability
for the present value of all legal obligations associated with the retirement
of tangible long-lived assets and an asset retirement cost was capitalized as
part of the carrying value of the associated asset. Upon initial application
of SFAS 143, a cumulative effect of a change in accounting principle was also
required in order to recognize a liability for any existing ARO's adjusted for
cumulative accretion, an increase to the carrying amount of the associated
long-lived asset and accumulated depreciation on the capitalized cost.
Subsequent to initial measurement, liabilities are required to be accreted to
their present value each period and capitalized costs are depreciated over the
estimated useful life of the related assets. Upon settlement of the liability,
the Company will settle the obligation against its recorded amount and will
record any resulting gain or loss. As a result of the adoption of SFAS 143 on
January 1, 2003, the Company recorded a $272,649 increase in the net
capitalized cost of its oil and gas properties.
The effect of these changes for the quarter ending March 31, 2006, resulted in
a decrease in income from continuing operations of $6,279. The cumulative
effect of these changes on years prior to January 1, 2003, approximately
$810,115 ($0.23 per common share), has been charged to operations in 2003.
The effect on net income of this change in accounting methods is as follows:
Amount Per Share
-------- ---------
Cumulative effect to January 1, 2003 $(810,115) $(0.23)
Effect on three months ended March 31, 2005 (5,945) --
Effect on three months ended March 31, 2006 (6,279) --
There are no legally restricted assets for the settlement of asset retirement
obligations.
9
A reconciliation of the Company's asset retirement obligations from the
periods presented are as follows:
Amount
-------
Beginning Balance, January 1, 2006 $955,169
Incurred during the period --
Settled during the period --
Accretion expense 4,809
Revisions in estimates --
-------
Ending Balance, March 31, 2005 $959,978
=======
(6) OTHER ASSETS - DEPOSITS
In April 2004, the Company replaced it's $250,000 oil and gas blanket
performance surety bond, with a cash bond in the form of an irrevocable
certificate of deposit in the amount of $250,000.
(7) STOCK SPLIT
On March 28, 2006, the Company's Board of Directors approved a 3 for 2 stock
split payable on May 1, 2006 to shareholders of record as of April 17, 2006.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IMPACT OF CHANGING PRICES
The Company's revenue is affected by crude oil prices paid by the major oil
companies. Average crude oil prices for the first quarter of 2006 increased
by approximately $16.43 per equivalent barrel when compared with the same
period for 2005. During the first quarter of 2006 the Company experienced 59
separate price changes compared with 48 price changes during the same period
for 2005. The Company cannot predict the future course of crude oil prices.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased by $775,198 for the three months ended March 31, 2006. During
the first quarter of 2006, operating activities provided cash of $386,906.
Capital spending of $1,183,642 reduced cash for the first quarter of 2006.
See the Statements of Cash Flows for additional detailed information. A
$200,000 line of credit, unused at March 31, 2006, and short-term investments
of $1,350,000 provided additional liquidity during the first quarter of 2006.
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FORWARD LOOKING INFORMATION
Crude oil prices have increased by $12.20 per barrel as of May 11, 2006,
compared to prices at December 31, 2005. There have been 87 separate price
changes since December 31, 2005.
The first two months of 2006 were busy for the Company, with the drilling
of three new developmental wells within the Company's Carneros Creek field and
one joint venture exploratory well just outside of the existing field
boundaries. This is the highest level of drilling activity the Company has
had in the past twenty years.
The first well, Anderson #6, was programmed to be drilled to 3,100 feet to
evaluate four known oil bearing formations but drilling problems occurred in
the last 100 feet of the well and the last formation was not penetrated.
Nevertheless, production casing was run and cemented at 3,000 feet based upon
favorable mud and electric log results from the upper three oil zones. This
well was completed in the Phacoides formation in late April using a different
perforating technology and a sand-oil fracturing process. Since completion,
the well has been flowing up through the 5 1/2 inch casing through a 20/64
choke at the surface. This well is by far the best producer of any of the
wells completed in the Phacoides formation in this field.
The second well, Santa Fe #17, was drilled to 2,600 feet, penetrating all of
the expected zones and production casing was run. This well was designed,
located and drilled to test several separate shallow oil zones known to be
present in certain areas of the field. Management has changed its earlier
completion plans for this well and is now plans to utilize the same
perforating technology used on the Anderson #6 well along with a sand-oil
fracturing processes.
The third well, Santa Fe #18, was located and drilled to take advantage of an
area within the field that had been missed in earlier drilling activities.
This well went to a depth of 3,200 feet encountering all of the expected
producing zones, in addition to a deeper pay interval not normally found in
other wells in the area. This well was the first of the three wells to be
completed and has been producing a settled 20 barrels a day of 32 gravity oil.
The fourth well was an exploratory well located approximately one mile south
of the existing producing area of the Carneros Creek field. This well was a
joint venture project between the Company, who owns 52% and E&B Natural
Resources Management Corporation, who owns 48% and is the operator. The well
was drilled to 3,702 feet and encountered a good show in the Point of Rocks
formation. This well was stimulated with a sand-oil fracturing processes.
Production results have been mixed. The well has very good pressures but
continues to have low volumes. Discussions are ongoing with the Operator to
figure out what needs to be done next.
Availability of a drilling rig for wells planned for 2006 has become an
uncertainty. The Company has been informed by one specific drilling
contractor who the Company uses, that a rig may not be available until very
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late this year and possibly not until early nest year. Nevertheless,
management is currently reviewing five or six wells for possible re-completion
in the Phacoides formation. The Phacoides formation is behind pipe in a
number of the Company's wells in the Carneros Creek field.
The Company's growth in 2006 will be highly dependant on the amount of success
the Company has in its operations and capital investments, including the
outcome of wells that have not yet been drilled. The Company's capital
investment program may be modified during the year due to explorations and
development successes or failures, market conditions and other variables. The
production and sales of oil and gas involves many complex processes that are
subject to numerous uncertainties, including reservoir risk, mechanical
failures, human error and market conditions.
The Company has positioned itself, over the past several years, to withstand
various types of economic uncertainties, with a program of consolidating
operations on certain producing properties and concentrating on properties
that provide the major revenue sources. The drilling of a new well and
several limited work-overs of certain wells have allowed the Company to
maintain its crude oil reserves for the last three years. The Company expects
to maintain its reserve base in 2006, by drilling new wells and routine
maintenance of its existing wells.
The Company may be subject to future costs necessary for compliance with the
new implementation of air and water environmental quality requirements of the
various state and federal governmental agencies. The requirements and costs
are unknown at this time, but management believes that costs could be
significant in some cases. As the scope of the requirements become more
clearly defined, management may be better equipped to determine the true costs
to the Company.
The Company continues to absorb the costs for various state and local fees and
permits under new environmental programs, the sum of which were not material
during 2005. The Company retains outside consultants to assist the Company in
maintaining compliance with these regulations. The Company is actively
pursuing an ongoing policy of upgrading and restoring older properties to
comply with current and proposed environmental regulations. The costs of
upgrading and restoring older properties to comply with environmental
regulations have not been determined. Management believes that these costs
will not have a material adverse effect upon its financial position or results
of operations.
Portions of the Quarterly Report, including Management's Discussion and
Analysis, contain forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the Company's actual results
and performance in future periods to be materially different from any future
results or performance suggested in forward-looking statements in this
release. Such forward-looking statements speak only as of the date of this
report and the Company expressly disclaims any obligation to update or revise
any forward-looking statements found herein to reflect any changes in Company
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expectations or results or any change in events. Factors that could cause
results to differ materially include, but are not limited to: the timing and
extent of changes in commodity prices of oil, gas and electricity,
environmental risk, drilling and operational costs, uncertainties about
estimates of reserves and government regulations.
Item 4. CONTROLS AND PROCEDURES
Based on their evaluation of the Company's disclosure controls and
procedures as of a date within 90 days of the filing of this Report, the Chief
Executive Officer and Chief Financial Officer have concluded that such
controls and procedures are effective. There were no significant changes in
the Company's internal controls or in other factors that could significantly
affect such controls subsequent to the date of their evaluation.
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2006
COMPARED TO THE QUARTER ENDED MARCH 31, 2005
REVENUES
Oil and gas revenue increased by 30% for the three months ended March 31, 2006
when compared with the same period for 2005. Oil and gas revenue increased by
39% due to higher average crude oil prices for the first quarter of 2006.
The average price of the Company's oil and gas for the first quarter of 2006
increased by approximately $16.43 per equivalent barrel when compared to the
same period of 2005. This was offset by a reduction in revenues of 9% due to
lower crude oil production/sales. The Company's net revenue share of crude
oil production decreased by approximately 1,500 barrels for the first three
months of 2006. The decrease in crude oil production is primarily the result
of a decline in production on certain of the Company's properties.
OPERATING EXPENSES
Operating expenses increased by 8% for the first quarter of 2006. The cost
to produce an equivalent barrel of crude oil during the first quarter of
2006 was $20.91 per barrel which had increased by approximately $3.23 per
barrel when compared with the production costs for the first quarter of 2005.
The increase in operating expenses for the first quarter of 2006 was due
primarily to the adjustment to the ending crude oil inventory. The Company
adjusts the carrying value of its crude oil inventory at the end of each
quarter based on quarter ending volumes and costs of production. The
difference between the inventory adjustment at the end of the first quarter of
2006 compared with the adjustment recorded at the end of the first quarter of
2005 resulted in an increase of approximately 6% in operating expenses.
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GENERAL AND ADMINISTRATIVE
General and administrative expenses increased by approximately 15% for the
first three months of 2006 when compared with the same period for 2005. The
increase in general and administrative expenses is due primarily to an
increase in outside consulting fees of 8% due to the hiring of a petroleum
engineer on a part-time basis.
PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION
The provision for depletion, depreciation and amortization increased by 7%
for the first quarter of 2006, when compared with the same period for 2005.
The increase is due primarily to a 7% increase in depletion of the Companies
oil and gas properties. The increase in depletion is due primarily to an
increase in the depletable base of oil and gas properties due to the drilling
of two new wells one in 2004 and one in 2003.
INCOME TAX PROVISION
The Company's income tax provision consists mainly of current estimated taxes
for Federal and California state income taxes. The increase in taxes for the
first quarter of 2006 is due to the fact that the Company has utilized all of
its Federal net operating loss carryforwards.
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PYRAMID OIL COMPANY
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes in Securities
None
Item 3. - Defaults Upon Senior Securities
None
Item 4. - Submission of Matters to a Vote of Security Holders
None
Item 5. - Other Information
None
Item 6. - Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Amended Articles of Incorporation
14.1 Code of Ethics for Senior Officers
99.1 Certification by Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification by Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
b. The following Form 8-K's were filed during the three months
ended March 31, 2006.
January 16, 2006 Press Release - Pyramid Oil Company Announces
Drilling operations
February 21, 2006 Press Release - Pyramid Oil Company Announces
that it has Completed Drilling Operations at its Carneros Creek
Field
February 28, 2006 Press Release - Pyramid Oil Announces Field
Extension Discovery
March 28, 2006 Press Release - Pyramid Oil Company Announces
Record Profits
15
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
PYRAMID OIL COMPANY
(registrant)
Dated: May 12, 2006 JOHN H. ALEXANDER
---------------------
John H. Alexander
President
Dated: May 12, 2006 LEE G. CHRISTIANSON
---------------------
Lee G. Christianson
Chief Financial Officer
PAGE <16>
Certification By Principal Executive Officer Pursuant
to Rule 13A-14 or 15D-14 of the SEC Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John H. Alexander, the President of Pyramid Oil Company (the registrant),
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pyramid Oil
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
PAGE <17>
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: May 12, 2006
By: JOHN H. ALEXANDER
-----------------------
John H. Alexander
Chief Executive Officer
PAGE <18>
Certification By Principal Financial Officer Pursuant
to Rule 13A-14 or 15D-14 of the SEC Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Lee G. Christianson, the Chief Financial Officer of Pyramid Oil Company
(the registrant), certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pyramid Oil
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
PAGE <19>
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: May 12, 2006
By: LEE G. CHRISTIANSON
------------------------
Lee G. Christianson
Chief Financial Officer