1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 2000
/ / 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 No.)
2008 - 21st. Street, P. O. Box 832 93302
Bakersfield, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (661) 325-1000
Securities registered pursuant to Section 12 (b) of the Exchange Act: NONE
Securities registered pursuant to Section 12 (g) of the Exchange Act:
Common Stock Without Par Value
(Title of Class)
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 period 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
2
State the registrant's revenues for its most recent fiscal year: $2,023,805
The aggregate market value on March 16, 2001, of Common shares held by
non-affiliates was approximately $973,000 based on the average closing bid and
asked prices of the registrant's Common shares on such date, as quoted by the
National Quotation Bureau.
At March 16, 2001, there were 2,494,430 Common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its 2001 Annual
Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the registrant's fiscal year are
incorporated by reference into Part III.
Transitional Small Business Disclosure Format (check one):
Yes No X
3
PYRAMID OIL COMPANY
2000 FORM 10-KSB ANNUAL REPORT
Table of Contents
Page
PART I
Item 1. Description of Business . . . . . . . . 4
Item 2. Description of Property . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . 12
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . 13
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . 14
Item 7. Financial Statements . . . . . . . . . . 20
Item 8. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure . . . 47
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section
16(a) of the Exchange Act . . . . . . . 47
Item 10. Executive Compensation . . . . . . . . . 47
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . 47
Item 12. Certain Relationships and Related Transactions 48
PART IV
Item 13. Exhibits and Reports on Form 8-K . . . . . 49
4
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
-----------------------------
Except for the historical information contained herein, the matters discussed
in this Annual Report are forward-looking statements which involve risks and
uncertainties, including but not limited to economic, competitive, political,
regulatory and governmental factors affecting the Company's revenues,
operations, markets and prices, properties and other factors discussed in the
Company's various filings with the Securities and Exchange Commission.
PART I
------
ITEM 1 - DESCRIPTION OF BUSINESS
--------------------------------
(a) GENERAL BUSINESS DESCRIPTION
----------------------------
Pyramid Oil Company is a California corporation that has been in the oil and
gas business continuously, since it was incorporated on October 9, 1909.
Pyramid Oil Company, hereinafter referred to as "Pyramid" or the "Company," is
engaged in the business of exploration, development and production of crude
oil and natural gas.
Pyramid acquires interests in land and producing properties through
acquisition and lease on which it drills and/or operates oil or gas wells in
efforts to discover and/or to produce oil and gas. Crude oil and natural gas
produced from these properties are sold to various refineries and pipeline
companies. The majority of all oil and gas properties that Pyramid owns and
operates is for its own account. Pyramid also participates in specific joint
ventures with others in the development of oil and gas properties. Pyramid's
interests in these properties will vary depending on the availability of said
interests and their locations.
The Company's executive offices are located at 2008 21st Street, Bakersfield,
California, 93301, telephone (661) 325-1000, facsimile (661) 325-0100.
(b) DESCRIPTION OF BUSINESS - OIL AND GAS OPERATIONS
------------------------------------------------
Exploration and Development
---------------------------
Pyramid operates in a highly competitive industry wherein many companies, from
large multinational companies to small independent producers, are competing
for a finite amount of oil and gas resources. The Company seeks out
properties to explore for oil and gas by drilling and also seeks out producing
oil and gas properties that can be purchased and operated.
5
Management believes that under the right economic conditions, several of the
producing properties that the Company owns could have further developmental
potential. Certain oil properties currently owned and operated by the Company
may be receptive to enhanced oil recovery procedures when economic conditions
improve.
Oil and Gas Production Operations
---------------------------------
Pyramid owns and operates 28 oil and gas leases (properties) located within
Kern and Santa Barbara Counties in the State of California. All of these
properties are capable of producing oil or natural gas, although not all of
these properties are considered profitable under certain economic conditions.
During 2000, the Company operated 21 leases within California, with total
annual gross oil production exceeding 500 barrels per lease. Production
operations primarily consist of the daily pumping of oil from a well(s) into
tanks, maintaining the production facilities both at the well and tank
settings, preparing and shipping the crude oil to buyers. Daily operations
differ from one property to another, depending on the number of wells, the
depth of the wells, the gravity of the oil produced and the location of the
property. All of Pyramid's oil production is classified as primary recovery
production at this time; although certain properties may be conducive to
secondary recovery operations in the future, depending on the prevailing price
of oil.
Primary recovery of oil and gas is by means of natural flow(s) or artificial
lift of oil and gas from a single well bore. Natural gas and petroleum fluids
enter the well bore by means of reservoir pressure or gravity; fluids and
gases are moved to the surface by natural pressure or by means of artificial
lift. In secondary recovery operations, liquids or gases are injected into the
reservoirs for the purpose of augmenting reservoir energy or increasing
reservoir temperatures. Secondary recovery operations, usually, but not
always, are done after the primary-recovery phase has passed.
The Company employs field level personnel (i.e., pumpers, rig crews,
roustabouts and equipment operators) that perform basic daily activities
associated with producing oil and gas. Daily operations include inspections of
surface facilities and equipment, gauging, reporting and shipping oil, and
routine maintenance and repair activities on wells, production facilities and
equipment. The Company owns and maintains various pieces of equipment
necessary for employees to perform repair and maintenance tasks on Company
properties. Such equipment consists of service rigs, mobile pumps, vacuum
trucks, hot oil truck, backhoe, trucks and trailers.
Occasionally, the Company drills new wells or redrills existing wells on
properties owned by the Company in an attempt to increase oil and gas
production. In the last five years, the Company has utilized the services of
outside drilling contractors for drilling new wells and redrilling existing
wells. Maintenance and repairs of existing wells to maintain or increase oil
and gas production are carried out by Company personnel on a continuing basis.
Most maintenance and repair work is performed with Company rigs.
6
Economic factors associated with the price of oil and gas and the productive
output of wells determine the number of active wells the Company operates.
Under certain economic conditions, the Company has the potential to operate
approximately 125 wells, and of these, approximately 66 were in daily
operation during 2000. Operations continue to be reduced on specific
properties that are currently generating a marginal gross profit in an effort
to hold the properties until economic conditions warrant full scale
operations. The Company also owns other oil and gas interests outside of
California that it does not operate. These interests are located in Wyoming
and New York.
Marketing of Crude Oil and Natural Gas
--------------------------------------
The Company sells its crude oil to Kern Oil & Refining and Tosco Refining
Company, accounting for approximately 41.4% and 52.9%, respectively, of
Pyramid's crude oil and gas sales in 2000. While revenue from these customers
is significant, and the loss of any one could have an adverse effect on the
Company, it is management's opinion that the oil and gas it produces could be
sold to other crude oil purchasers, refineries or pipeline companies.
Natural gas is sold to companies in the area of operations. Market demand for
Pyramid's production is subject to various influences and can never be
assured, especially in an era of changing prices. The base values for crude
oil the Company sells is set by major oil companies in response to area and
market strengths and international influences. Types and qualities of crude
oil vary substantially in base values posted by crude oil buyers in various
areas of the country. Pyramid's crude oil sales are not seasonal, but uniform
throughout the year; however, there are some seasonal influences that may
affect natural gas sales from the interests owned in the State of New York.
(C) RISKS, COMPETITION AND INDUSTRY CONDITIONS
------------------------------------------
The profitability of the Company's operations depends primarily on the
production of oil and gas in commercially profitable quantities. Oil and gas
properties often fail to provide a return sufficient to repay the substantial
sums of money required for their acquisition, exploration and development.
The acquisition, exploration and development of oil and gas properties is a
highly competitive business. Many entities with which the Company competes
have significantly greater financial and staff resources. Such competitive
disadvantage could materially and adversely affect the Company's ability to
acquire new properties or develop existing properties.
The oil and gas industry, in general, has been adversely affected by several
factors beyond the Company's control, including unstable oil and gas prices,
uncertainty regarding the effect of pricing agreements and production quotas
and allocations established by the Organization of Petroleum Exporting
Countries, political instability in the Middle East and the status of
ever-changing federal and state legislation and regulation.
7
Given the uncertainty of international and domestic political actions and
their impact on the energy markets, it is difficult, if not impossible, to
predict the price or market situation for any oil or gas which is currently
owned or which could be developed by the Company. Depressed oil and gas
prices or significant curtailment in the Company's oil and gas production
from its better properties would have a material adverse effect on the
Company's operations.
(d) REGULATIONS
-----------
The Company's business is affected by an abundance of governmental laws and
regulations, including energy, environmental, conservation, tax and other laws
and regulations relating to the petroleum industry. Changes in any of these
laws and regulations could have a material and adverse effect on the Company's
business and financial stability. In view of the many uncertainties with
respect to current laws and regulations, including their applicability to the
Company, the Company cannot predict the overall effect of such laws and
regulations on future operations.
TAXATION
--------
The operations of the Company, as is the case in the petroleum industry
generally, are significantly affected by federal tax laws. Federal, as well as
state, tax laws have many provisions applicable to corporations which could
affect the future tax liability of the Company.
ENVIRONMENTAL
-------------
The Company's activities are subject to existing federal and state laws and
regulations governing environmental quality and pollution control. These laws
may require the acquisition of permits relating to certain ongoing operations,
for drilling, emissions, waste water disposal and other air and water quality
controls. In view of the uncertainty and unpredictability of environmental
statutes and regulations, the Company cannot ensure that such laws and
regulations will not materially and adversely affect the business of the
Company. The Company does not anticipate any material effect on its capital
expenditures or earnings as the result of governmental regulations, enacted or
proposed, concerning environmental protection or the discharge of material
into the environment. The Company is actively pursuing an ongoing policy of
upgrading and restoring older properties to comply with current and proposed
environmental regulations.
8
Late in the fourth quarter of 1998, the Company was notified by the United
States Environmental Protection Agency (EPA) that the Company was identified
as a "de minimis" contributor to the Casmalia Disposal Site in Santa Barbara
County, California. The EPA claimed that all parties who contributed to the
disposal site were potentially liable for a share of the clean up costs.
After extensive examination of the EPA's documentation, upon which the EPA
based their claims, the Company determined that all of the materials sent to
the Casmalia disposal site, by the Company, between 1980 and 1983 were found
to be non-toxic, non-hazardous materials, specifically exempt under Federal
EPA statutes (RCRA Subtitle C Regulations and CERCLA, Section 101(14), 42
U.S.C. Sec 9601(14)). EPA manifests identified over 97% of the materials sent
by the Company to this site as being oil field waste water.
In December 1999, the Company formally responded to the EPA, by denying all of
the allegations and providing factual evidence in support of the Company's
position. Currently, the EPA's position is that it does not consider parties
which only sent petroleum wastes to the site liable. Therefore, management
does not believe that the Company is, or will be, liable for any clean up
costs associated with the EPA's remediation of the Casmalia Disposal Site.
(e) Commitments and Contingencies
-----------------------------
The Company is liable for future dismantlement and abandonment costs
associated with its oil and gas properties. These costs include future site
restoration, post closure and other environmental exit costs. The costs of
future dismantlement and abandonment have not been determined. Management
believes that these costs will not have a material adverse effect upon its
financial position or results of operations.
In 1996, the Company filed a lawsuit in Kern County Superior Court, against
Mr. Russell R. Simonson, alleging a breach of a contractual agreement. The
lawsuit went to trial in 1997 and the trial court ruled that the Defendant
twice breached terms of an agreement, and the court awarded the Company
damages, interest and attorney's fees. The Defendant appealed the trial
court's decision and the matter was reviewed by the California Appeals Court.
In November 2000, the Appeals Court again ruled in favor of the Company,
upholding the original award of damages, interest and attorney's fees. On
March 5, 2001, the Company recorded a gain and received payment from the
Defendant in the amount of $395,708, concluding this matter.
The Company is subject to potential litigation within the normal course of
business. The resolution in any reporting period of such litigation
could have a material impact on Pyramid's financial position or results of
operations for that period. However, in management's opinion, it is unlikely
that the resolution of any such litigation will have a material adverse effect
upon the financial position or results of operations of the Company.
9
(f) OTHER
-----
The Company employed twelve full-time people as of December 31, 2000.
The Company had no material research and development costs for the three years
ended December 31, 2000.
All of the Company's revenues during 2000 were derived from domestic sources.
ITEM 2 - DESCRIPTION OF PROPERTY
--------------------------------
(a) DESCRIPTION OF PROPERTIES
-------------------------
The principal assets of the Company consist of proven and unproven oil and
gas properties, oil and gas production related equipment and developed and
undeveloped real estate holdings. There are also well servicing and drilling
equipment, truck and automotive, office and other equipment. The Company's
oil and gas properties are located exclusively in the continental United
States, in California, Wyoming and New York.
Developed oil and gas properties are those on which sufficient wells have been
drilled to economically recover the estimated reserves calculated for the
property. Undeveloped properties do not presently have sufficient wells to
recover the estimated reserves. The Company had no significant proved
undeveloped properties at December 31, 2000, 1999 and 1998.
(b) OIL AND GAS PROPERTIES
----------------------
The Company's estimated future net recoverable oil and gas reserves from
proved developed properties were assembled by System Technology Associates,
Inc., independent petroleum engineers, and are as follows:
Crude Oil Natural Gas
(BBLS) (MCF)
--------- -----------
January 1, 2001 341,000 72,000
2000 361,000 65,000
1999 384,000 127,000
1998 435,000 145,000
1997 499,000 278,000
10
The Company's estimated future net recoverable oil and gas reserves, noted in
the table above, have not been filed with any other Federal authority or
agency since January 1, 2000.
Using year-end oil and gas prices and lease operating expenses, the estimated
value of future net revenues to be derived from Pyramid's proved developed oil
and gas reserves, discounted at 10%, were $2,311,000 at December 31, 2000,
$2,718,000 at December 31, 1999, $1,001,000 at December 31, 1998, $1,688,000
at December 31, 1997, and $3,958,000 at December 31, 1996.
Pyramid participates in the drilling of developmental wells, no single one of
which would cause a significant change in the net reserve figure.
Pyramid's net oil and gas production after royalty and other working interests
for the past five years ending December 31, were as follows.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Crude oil (Bbls) 71,000 84,000 85,000 91,000 101,000
Natural gas (MCF) 9,000 24,000 36,000 35,000 48,000
Pyramid's average sales prices per barrel or per MCF of crude oil and natural
gas, respectively, and production costs per equivalent barrel (gas production
is converted to equivalent barrels at the rate of 6 MCF per barrel,
representing the estimated relative energy content of gas to oil) for the past
five years ending December 31, were as follows:
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Sales price:
Crude oil $26.16 $15.49 $10.73 $17.07 $18.80
===== ===== ===== ===== =====
Natural gas $ 3.14 $ 1.82 $ 1.64 $ 1.99 $ 1.35
===== ===== ===== ===== =====
Production costs $13.70 $ 8.70 $ 8.60 $ 9.90 $ 9.60
===== ===== ===== ===== =====
The average selling price of Pyramid's crude oil at December 31, 2000, was
approximately $23.00 per barrel and the average selling price of Pyramid's gas
at December 31, 2000, was approximately $6.14 per MCF.
11
As of December 31, 2000, Pyramid had the following gross and net position in
wells and proved acres:
WELLS PROVED ACRES
----------------- -----------------
Gross (1) Net (1) Gross (2) Net (2)
-------- ------ -------- ------
149 125 22,217 6,489
=== === ====== =====
(1) "Gross wells" represents the total number of wells in which the
Company has a working interest. "Net wells" represents the number
of gross wells multiplied by the percentage of the working
interests therein held by the Company.
(2) "Gross acreage" represents all acres in which the Company has a
working interest. "Net acres" represents the aggregate of the
working interests of the Company in the gross acres.
During the year ended December 31, 1997, Pyramid participated in the drilling
of 1 well. No wells were drilled in 2000, 1999, 1998 and 1996. All of these
wells were drilled in California and completed as producing wells.
"Unproven" oil and gas properties are those on which the presence of
commercial quantities of reserves of crude oil or natural gas has not
been established.
"Undeveloped" acreage exists on those oil and gas properties where
economically recoverable reserves are estimated to exist in proved
reservoirs from wells to be drilled in the future.
As of December 31, 2000, Pyramid held positions in unproven acreage in the
following locations:
ACRES
------------------
Gross Net
------ ------
New York
Mount Morris and Livingston Counties 34,800 9,788
====== =====
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(c) REAL PROPERTY OWNED
-------------------
Pyramid owned the following real property as of December 31, 2000, all located
in California.
County of Kern
Mullaney yard 20 acres
Grazing land 160 acres
Miller property 112 acres
Ranton property 80 acres
City of Bakersfield 3 lots
Located on the three lots of real property in the city of Bakersfield is the
Company's executive offices. This property was acquired by the Company in
1986. The office building located on this property is a one story structure
with approximately 4,200 square feet in good condition.
ITEM 3 - LEGAL PROCEEDINGS
--------------------------
Pyramid is not party to any proceedings or actions which management believes
might have a material effect upon its financial position or results of
operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of 2000.
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PART II
-------
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------------
(a) PRICE RANGE OF COMMON SHARES
The common stock of Pyramid is traded on the over-the-counter market. The
following are high and low "bid" quotations for each quarter of 2000 and 1999,
and reflect inter-dealer prices without retail markup, markdown or commission
and may not necessarily represent actual transactions.
High Low
Bid Bid
---- -----
2000
First Quarter $1.0000 $0.3125
Second Quarter 0.7500 0.2813
Third Quarter 0.9375 0.6250
Fourth Quarter 0.9375 0.6875
1999
First Quarter 0.1250 0.1250
Second Quarter 0.1250 0.1250
Third Quarter 0.1250 0.1250
Fourth Quarter 0.6250 0.1250
(b) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
Title of Class
--------------
Common Shares, without par value
Approximate Number of Holders of Record of
the Outstanding Common Shares as of
December 31, 2000
-------------------------------------------
722
The Company has paid no dividends on its common shares for the past five years
and does not anticipate paying any dividends in the foreseeable future.
Dividends on the common shares, if any, will be dependent upon the Company's
earnings, financial conditions and other relevant factors as determined by the
Board of Directors.
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ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
IMPACT OF CHANGING PRICES
-------------------------
Average prices increased by approximately $10.85 per equivalent crude oil and
gas barrel sold during 2000 as compared with average prices for 1999. In 2000
there were 100 separate crude oil price changes, as compared with 64 price
changes in 1999. The difference between the highest and lowest posted prices
in 2000 was $13.65 per barrel. By comparison, this same differential in 1999
and 1998 was $15.50 and $6.00 per barrel, respectively. Continuing
uncertainty in crude oil prices has made it impractical for the Company to
make any commitments to further develop its oil and gas properties. Crude oil
prices must stabilize for a long-term period, at economic levels, before
resources would be available to expand the Company's oil and gas reserves.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash increased by $41,952 as of December 31, 2000 when compared to December
31, 1999. Operating activities in 2000 provided cash of $620,028. Capital
spending of $175,530, purchase of short-term investments of $500,000 and
principal payments on the Company's long-term debt totaling $50,296 used cash
in 2000. This was offset by proceeds from sale of property and equipment of
$62,750 and issuance of long-term debt of $85,000. The components of the
changes in cash for 2000 are more fully described in the Statements of Cash
Flows included in Item 7 of this Form 10-KSB. Adequate funds were available
to carry out all necessary oil and gas operations and to maintain its
equipment. A $100,000 line of credit, unused at December 31, 2000, provided
additional liquidity during 2000. Management believes the Company could also
secure funds, if necessary, from other outside sources to finance acquisitions
or other capital projects.
Management continues to examine various alternatives for increasing capital
resources including, among other things, participation with industry and/or
private partners and specific rework of existing properties to enhance
production and expansion of its sales of crude oil and natural gas in
California. If necessary, Pyramid could sell certain nonessential assets to
raise capital for the benefit of these programs.
The Company has not generated sufficient cash flows to enable it to further
develop its oil and gas properties and to risk exploratory drilling costs in
attempts to expand its oil and gas reserves. No wells were drilled in 2000,
1999 or 1998. The Company completed a redrill of an existing well in the
second quarter of 1998.
15
The Company's crude oil reserves declined for the years ended December 31,
2000 and 1999, due primarily to production of existing reserves. The
Company's crude oil reserves decreased for the year ended December 31, 1998
due primarily to lower crude oil prices at year end.
The Company's business plan, implemented to deal with the unstable crude oil
market, has been to concentrate its efforts and resources on maintaining oil
and gas production on existing properties and deferring certain developmental
and exploration activities until crude oil prices increase. This has enabled
the Company to preserve its position on certain developmental properties
during the periods of low oil prices and to conserve its capital.
Certain properties that the Company owns have become uneconomic and have been
shut-in. When these properties are not operated, any reserves that could be
assigned to these properties are not included in the year-end engineering
report of total Company reserves. Another major factor that directly affects
the Company's future reserve base is the price of crude oil at December 31 of
any given year. The year-end price of oil and gas has a significant impact on
the estimated future net recoverable oil and gas reserves from proved
developed properties. At certain depressed price levels, some of the
Company's oil and gas properties are not economical to operate and thus its
year-end engineering reserve reports do not assign any oil and gas reserves to
these properties. Conversely, if year-end prices should increase to a certain
level, the reserves on these leases would be economic to produce and would
increase the Company's reserves.
During 1998, the Company entered into a joint venture project, with several
other oil and gas companies, to explore for and develop potential natural gas
reserves in the Solano County area of California. This project is employing
3-D seismic technology and exploratory drilling, in hopes of finding and
developing natural gas reserves on approximately 3,200 acres of leased ground.
The Company's position is that of a non-operator.
Drilling operations on the first well began early in the first quarter of
2000. This well encountered substantial mechanical problems prior to reaching
its intended depth and was abandoned due to these problems. The Company
participated in the drilling of a second well on this lease in the fourth
quarter of 2000. This well was abandoned due to insufficient gas reserves.
The Company has not made any decisions about participating in any future
proposed exploration wells on this project. The Company expended
approximately $18,000 for its share of costs on the first well during 1999.
The Company expended an additional $15,000 on the first well during 2000. The
Company expended approximately $18,000 for its share of costs on the second
well during 2000.
The Company's business plan incorporates the concept that when crude oil
prices increase and stabilize at a profitable level, renewed developmental and
exploratory drilling activities will escalate accordingly. The plan also
projects that the Company would have sufficient cash flows from operations to
enable it to develop its existing oil and gas properties and the ability to
16
acquire additional producing properties and/or exploratory prospects, thereby,
replacing and/or increasing its present oil and gas reserves.
FORWARD-LOOKING INFORMATION
---------------------------
Looking forward into 2001, crude oil prices have increased by $3.00 per barrel
as of March 23, 2001, compared to prices at December 31, 2000. There have
been fifteen separate price changes since December 31, 2000. The Company
is unable to predict any future price changes that would impact the remainder
of 2001.
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. 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 2001,
by 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 be burdened with additional costs for various state
and local fees and permits under new environmental programs, the sum of which
were not material during 2000. 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.
17
ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
--------------------------------------------------------
Results of Operations for the Fiscal Year Ended December 31, 2000
Compared to the Fiscal Year Ended December 31, 1999
---------------------------------------------------
REVENUES
--------
Oil and gas sales increased by 55% for the year ended December 31, 2000, when
compared with the same period for 1999. Oil and gas sales increased by 64%
due to higher average prices for 2000. The average price of the Company's oil
and gas increased by approximately $10.85 per equivalent barrel for 2000 when
compared to 1999. The increase in revenues due to favorable prices was offset
by a 9% reduction in production for 2000. Production for 2000 decreased by
approximately twenty-one barrels per day when compared with production in
1999.
OPERATING EXPENSES
------------------
Operating expenses increased by 31% for the year ended December 31, 2000 when
compared with the same period of 1999. The cost to produce an equivalent
barrel of crude oil increased by approximately $5.00 per barrel for 2000 when
compared to 1999. Approximately 15% of the increase in operating expenses is
attributable to two of the Company's oil and gas properties that were shut-in
for most of 1999. These properties were returned to production due to the
high oil prices in 2000. Also, major maintenance work was done on two oil
wells that increased operating expenses by approximately 13% for 2000.
GENERAL AND ADMINISTRATIVE
--------------------------
General and administrative expenses increased by 23% for the year ended
December 31, 2000 when compared to the same period for 1999. Professional
services were higher by 12% for 2000 due primarily to higher costs for legal
services. Legal services were higher by 9% due to an increase in the level of
legal activity for 2000 related to an ongoing lawsuit (see Note 6 of Notes to
Financial Statements, Commitments and Contingencies).
DEPLETION, DEPRECIATION, AMORTIZATION
AND VALUATION ALLOWANCE
-------------------------------------
The provision for depletion, depreciation and amortization decreased by 23%
for the year ended December 31, 2000, when compared with the same period for
1999. The decrease is due primarily to a decline in the depletion rate for
oil and gas properties.
18
OTHER INCOME
------------
Other income increased by approximately $71,000 for the year ended December
31, 2000. The increase in other income is due primarily to gain on the sales
of fixed assets during 2000. No fixed assets were sold during 1999.
Results of Operations for the Fiscal Year Ended December 31, 1999
Compared to the Fiscal Year Ended December 31, 1998
---------------------------------------------------
REVENUES
--------
Oil and gas sales increased by 38% for the year ended December 31, 1999, when
compared with the same period for 1998. Oil and gas sales increased by 43%
due to higher average prices for 1999. The average price of the Company's oil
and gas increased by approximately $4.80 per equivalent barrel for 1999 when
compared to 1998. The increase in revenues due to favorable prices was offset
by a 5% reduction in production for 1999. Production for 1999 decreased by
approximately thirteen barrels per day when compared with production in 1998.
OPERATING EXPENSES
------------------
Operating expenses decreased by 3% for the year ended December 31, 1999 when
compared with the same period of 1998. The cost to produce an equivalent
barrel of crude oil decreased by approximately twenty-five cents per barrel
for 1999 when compared to 1998.
GENERAL AND ADMINISTRATIVE
--------------------------
General and administrative expenses decreased by 10% for the year ended
December 31, 1999 when compared to the same period for 1998. Outside
professional services were lower by 8% for 1999. Legal services were lower by
9% due to a reduction in the level of legal activity for 1999.
DEPLETION, DEPRECIATION, AMORTIZATION
AND VALUATION ALLOWANCE
-------------------------------------
The provision for depletion, depreciation and amortization decreased by 60%
for the year ended December 31, 1999, when compared with the same period for
1998. The Company recorded an increase in valuation allowances of $270,000 in
the fourth quarter of 1998 due to an impairment in the value of certain oil
and gas properties (see Note 1 of Notes to Financial Statements, Significant
19
Accounting Policies, Costs Incurred in Oil and Gas Producing Activities). No
valuation allowances were recorded in 1999. The provision for depletion of
oil and gas properties also decreased in 1999 due to the decrease in the net
carrying value of oil and gas properties in 1998.
Recent Accounting Developments
------------------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). The statement requires the
recognition of all derivatives as either assets or liabilities in the balance
sheet and the measurement of those instruments at fair value. The accounting
for changes in the fair value of a derivative depends on the planned use of
the derivative and the resulting designation. The adoption of SFAS 133 in the
fourth quarter of 2000 did not have a significant impact on the Company's
financial position, results of operations or cash flows.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
101). SAB 101 provides guidance for revenue recognition under certain
circumstances. The adoption of SAB 101 in 2000 did not have a significant
impact on the Company's financial position, results of operations or cash
flows.
20
ITEM 7- FINANCIAL STATEMENTS
-----------------------------
PYRAMID OIL COMPANY
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Page
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . 21
FINANCIAL STATEMENTS:
Balance sheets - December 31, 2000 and 1999 . . . . . . . . . . 22-23
Statements of operations - years ended
December 31, 2000, 1999 and 1998 . . . . . . . . . . . . . . 24
Statements of shareholders' equity - years ended
December 31, 2000, 1999 and 1998 . . . . . . . . . . . . . . 25
Statements of cash flows - years
ended December 31, 2000, 1999 and 1998 . . . . . . . . . . . 26-27
Notes to financial statements . . . . . . . . . . . . . . . . . 28
21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders and the Board of Directors of
Pyramid Oil Company:
We have audited the accompanying balance sheets of Pyramid Oil Company (a
California corporation) as of December 31, 2000 and 1999, and the related
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pyramid Oil Company as of
December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Los Angeles, California
March 8, 2001
22
FINANCIAL STATEMENTS
PYRAMID OIL COMPANY
BALANCE SHEETS
-----------------------------------------------------------------------------
ASSETS
------
December 31,
-------------------------
2000 1999
---------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 151,727 $ 109,775
Short-term investments 700,000 200,000
Trade accounts receivable
(net of reserve for doubtful
accounts of $4,000 in 2000
and 1999) 212,714 184,867
Crude oil inventory 56,156 35,153
Prepaid expenses 84,230 67,449
Deferred income taxes 22,012 75,650
--------- ----------
Total current assets 1,226,839 672,894
--------- ----------
PROPERTY AND EQUIPMENT, at cost:
Oil and gas properties and
equipment (successful
efforts method) 10,343,773 10,367,907
Drilling and operating equipment 3,118,778 3,179,652
Land, buildings and improvements 921,767 921,767
Automotive, office and
other property and equipment 1,067,625 1,055,857
---------- ----------
15,451,943 15,525,183
Less - accumulated depletion,
depreciation, amortization
and valuation allowances (13,846,912) (13,872,078)
---------- ----------
1,605,031 1,653,105
---------- ----------
$ 2,831,870 $ 2,325,999
========== ==========
The accompanying notes are an integral part of these balance sheets.
23
PYRAMID OIL COMPANY
BALANCE SHEETS
-----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
December 31,
----------------------------
2000 1999
---------- ----------
CURRENT LIABILITIES:
Accounts payable $ 66,362 $ 44,621
Accrued professional fees 18,750 24,000
Accrued taxes, other than
income taxes 22,645 20,567
Accrued payroll and related costs 36,040 30,985
Accrued royalties payable 82,621 74,082
Accrued insurance 29,864 21,613
Current maturities of long-term debt 27,500 17,604
--------- ----------
Total current liabilities 283,782 233,472
--------- ----------
LONG-TERM DEBT, net of current
maturities 29,080 4,272
--------- ----------
DEFERRED INCOME AND OTHER TAXES 22,012 118,121
--------- ----------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Common stock, no par value -
Authorized - 10,000,000 shares
Issued and outstanding -
2,494,430 shares 1,071,610 1,071,610
Retained earnings 1,425,386 898,524
---------- ----------
2,496,996 1,970,134
---------- ----------
$ 2,831,870 $ 2,325,999
========== ==========
The accompanying notes are an integral part of these balance sheets.
24
PYRAMID OIL COMPANY
STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------
Year ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
REVENUES: $ 2,023,805 $ 1,309,136 $ 951,015
---------- ---------- ----------
COSTS AND EXPENSES:
Operating expenses 997,550 760,744 780,259
Exploration costs 35,423 27,976 --
General and administrative 368,332 299,245 332,513
Taxes, other than income and
payroll taxes 45,759 51,744 59,743
Provision for depletion,
depreciation, amortization
and valuation allowance 184,036 240,017 607,067
Other costs and expenses 13,593 11,093 16,082
--------- --------- ----------
1,644,693 1,390,819 1,795,664
--------- --------- ----------
OPERATING INCOME (LOSS) 379,112 ( 81,683) (844,649)
--------- --------- ----------
OTHER INCOME (EXPENSE):
Interest income 24,538 11,104 30,192
Gain on sales of property
and equipment 58,605 -- --
Other income 28,696 29,465 21,594
Interest expense ( 5,330) ( 6,824) ( 7,696)
---------- --------- ---------
106,509 33,745 44,090
---------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAX (BENEFIT) PROVISION 485,621 ( 47,938) ( 800,559)
Income tax (benefit) provision (41,241) 1,125 1,125
---------- --------- ---------
NET INCOME (LOSS) $ 526,862 $ ( 49,063) $ ( 801,684)
========== ========= =========
BASIC INCOME (LOSS)PER COMMON SHARE $ .21 $ (.02) $ (.32)
========== ========= =========
DILUTED INCOME (LOSS)PER COMMON SHARE $ .21 $ (.02) $ (.32)
========== ========= =========
Weighted average number of
common shares outstanding 2,494,430 2,494,430 2,494,430
========== ========= ==========
The accompanying notes are an integral part of these statements.
25
PYRAMID OIL COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------
Common Shares
Issued and Common Retained
Outstanding Stock Earnings
------------- ---------- ----------
Balances, December 31, 1997 2,494,430 $1,071,610 $1,749,271
Net loss -- -- (801,684)
--------- --------- ---------
Balances, December 31, 1998 2,494,430 1,071,610 947,587
Net loss -- -- ( 49,063)
--------- --------- ---------
Balances, December 31, 1999 2,494,430 1,071,610 898,524
Net income -- -- 526,862
--------- --------- ---------
Balances, December 31, 2000 2,494,430 $1,071,610 $1,425,386
========= ========= =========
The accompanying notes are an integral part of these statements.
26
PYRAMID OIL COMPANY
STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------
Year ended December 31,
--------------------------------
2000 1999 1998
--------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 526,862 $( 49,063) $(801,684)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Provision for depletion,
depreciation, amortization
and valuation allowance 184,036 240,017 607,067
Exploration costs 35,423 27,976 --
Gain on sale of
property and equipment (58,605) -- -
Income tax benefit (42,471) -- --
Changes in operating assets
and liabilities:
(Increase) decrease in trade
accounts receivable ( 27,847) (107,552) 76,506
(Increase) decrease in crude
oil inventories ( 21,003) 3,218 22,823
(Increase) decrease
in prepaid expenses ( 16,781) 13,679 12,459
Increase (decrease) in
accounts payable and
accrued liabilities 40,414 25,661 (58,927)
------- ------- -------
Net cash provided by (used in)
operating activities 620,028 153,936 (141,756)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (175,530) ( 41,605) (214,824)
Proceeds from sale of
property and equipment 62,750 --
Net change in short-term investments (500,000) 100,000 (300,000)
------- ------- -------
Net cash (used in) provided by
investing activities (612,780) 58,395 (514,824)
------- ------- -------
The accompanying notes are an integral part of these statements.
27
PYRAMID OIL COMPANY
STATEMENTS OF CASH FLOWS
(CONTINUED)
-----------------------------------------------------------------------------
Year ended December 31,
------------------------------
2000 1999 1998
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on line
of credit ( 48,000) (181,650) ( 62,596)
Proceeds from line of credit 48,000 81,650 162,596
Principal payments on long-term
debt ( 50,296) ( 20,873) ( 26,097)
Proceeds from issuance of long-term debt 85,000 - --
------- ------- -------
Net cash provided by (used in)
financing activities 34,704 (120,873) 73,903
------- ------- -------
Net increase (decrease) in cash
and cash equivalents 41,952 91,458 (582,677)
Cash and cash equivalents
at beginning of year 109,775 18,317 600,994
------- ------- -------
Cash and cash equivalents at end of year $ 151,727 $ 109,775 $ 18,317
======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year
for interest $ 5,330 $ 6,824 $ 7,696
======= ======= =======
Cash paid during the year
for income taxes $ 1,230 $ 1,125 $ 1,125
======= ======= =======
The accompanying notes are an integral part of these statements.
28
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
----------------------------------------------------------------------------
1. Significant Accounting Policies
-------------------------------
Nature of Operations
--------------------
Pyramid Oil Company (the Company), a California Corporation, has been in
the oil and gas business continuously since it was incorporated on
October 9, 1909. The Company is in the business of exploration,
development and production of crude oil and natural gas. The Company
operated and has interests in 28 oil and gas leases in Kern and Santa
Barbara Counties in the State of California. The Company also owns oil
and gas interests in Wyoming and New York that it does not operate. The
Company grants short-term credit to its customers and generally receives
payment within 30 days.
Pervasiveness of Estimates
--------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents principally consist of demand deposits and
certificates of deposits having original maturities of three months or
less.
Inventory
---------
Inventories of crude oil and condensate are valued at the lower of cost,
predominately on a first-in, first-out (FIFO) basis, or market, and
include certain costs directly related to the production process.
29
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
----------------------------------------------------------------------------
Costs Incurred in Oil and Gas Producing Activities
--------------------------------------------------
The Company has adopted the "successful efforts" method of accounting
for its oil and gas exploration and development activities, as set forth
in the Statement of Financial Accounting Standards No. 19, as amended,
issued by the Financial Accounting Standards Board.
The Company initially capitalizes expenditures for oil and gas property
acquisitions until they are either determined to be successful (capable
of commercial production) or unsuccessful. The carrying value of all
undeveloped oil and gas properties is evaluated periodically and reduced
if such carrying value appears to have been impaired. Leasehold costs
relating to successful oil and gas properties remain capitalized while
leasehold costs which have been proven unsuccessful are charged to
operations in the period the leasehold costs are proven unsuccessful.
Costs of carrying and retaining unproved properties are expensed as
incurred.
The costs of drilling and equipping development wells are capitalized,
whether the wells are successful or unsuccessful. The costs of drilling
and equipping exploratory wells are capitalized until they are
determined to be either successful or unsuccessful. If the wells are
successful, the costs of the wells remain capitalized. If, however, the
wells are unsuccessful, the capitalized costs of drilling the wells, net
of any salvage value, are charged to operations in the period the wells
are determined to be unsuccessful.
The Company adopted the Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" (the
Statement). The Statement specifies when an impairment loss should be
recognized and how impairment losses should be measured for long-lived
assets to be held and used and for long-lived assets to be disposed of.
In accordance with the Statement, the costs of proved oil and gas
properties and equipment are periodically assessed on a lease by lease
basis to determine if such costs exceed undiscounted future cash flows,
and if conditions warrant an impairment reserve will be provided based on
the estimated future discounted cash flows. The Company recorded an
impairment of $270,000 in the fourth quarter of 1998 under these
guidelines. This impairment is reflected as additional depletion,
depreciation, amortization and valuation allowance in the accompanying
statement of operations.
30
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
------------------------------------------------------------------------------
Depletion, Depreciation, and Amortization
-----------------------------------------
Depletion of leasehold costs of producing oil and gas properties is
provided on the unit-of-production method, by individual property unit,
based on estimated recoverable proved reserves. Depreciation and
amortization of the costs of producing wells and related equipment are
provided on the unit-of-production method, by individual property unit,
based on estimated recoverable proved developed reserves. Amortization
of the costs of undeveloped oil and gas properties is based on the
Company's experience, giving consideration to the holding periods of
leaseholds. The average depletion per equivalent barrel of crude oil
produced for 2000, 1999 and 1998 were $1.49, $1.94 and $5.78,
respectively.
Drilling and operating equipment, buildings, automotive, office and
other property and equipment and leasehold improvements are stated at
cost. Depreciation and amortization are computed using the straight-line
method over the shorter of the estimated useful lives or the applicable
lease terms (range of 3 to 19 years). Any permanent impairment of the
carrying value of property and equipment is provided for at the time such
impairments become known.
Maintenance and Repairs
-----------------------
Maintenance, repairs and replacement expenditures are charged to
operations as incurred, while major renewals and betterments are
capitalized and depreciated over their useful lives.
Retirement or Disposal of Properties and Equipment
--------------------------------------------------
Costs and accumulated depletion, depreciation, amortization and
valuation allowances of property and equipment retired, abandoned, or
otherwise disposed of are removed from the accounts upon disposal, and
any resulting gain or loss is included in operations in the year of
disposition. However, upon disposal of a portion of an oil and gas
property, any proceeds received are treated as a recovery of cost and no
gain or loss is recognized in the year of disposition.
31
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
------------------------------------------------------------------------------
Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the
period that includes the enactment date.
Concentration of Credit Risk
----------------------------
The Company sells its crude oil to Kern Oil & Refining and Tosco Refining
Company, accounting for approximately 41.4%, and 52.9%, respectively, of
Pyramid's crude oil and gas sales in 2000. While revenue from these
customers is significant, and the loss of any one could have an adverse
effect on the Company, it is management's opinion that the oil and gas it
produces could be sold to other crude oil purchasers, refineries or
pipeline companies.
Reclassifications
-----------------
Reclassifications have been made to the financial statements for 1999 to
conform to the 2000 presentation.
32
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
------------------------------------------------------------------------------
2. Long-Term Debt and Line of Credit
---------------------------------
Long-term debt at December 31, 2000 and 1999, is summarized as follows:
December 31,
----------------------
2000 1999
--------- ---------
Note payable to a bank, secured by a deed
of trust on the corporate office, payable
in monthly installments of $1,467 principal,
with interest at the prime rate (8.5% at
December 31, 1999) plus 1.25%, final payment
December 2000. $ -- $ 21,876
Note payable to a bank, secured by equipment
purchased with the proceeds of the loan,
payable in monthly installments of $992
principal and interest, interest at 8.75%,
final payment in 2002. 20,899 --
Note payable to a bank, secured by equipment
purchased with the proceeds of the loan,
payable in monthly installments of $969
principal and interest, interest at 10%,
final payment in 2003. 22,282 --
Note payable to a bank, secured by equipment
purchased with the proceeds of the loan,
payable in monthly installments of $692
principal and interest, interest at 10%,
final payment in 2002. 13,399 --
------- -------
56,580 21,876
Less - current maturities ( 27,500) ( 17,604)
------- -------
$ 29,080 $ 4,272
======= =======
33
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
At December 31, 2000 approximately $114,000 of gross property and equipment
was pledged as collateral to secure approximately $57,000 principal amount of
long-term debt.
Maturities of long-term debt are as follows:
Year ending December 31, 2001 $ 27,500
2002 25,900
2003 3,180
-------
$ 56,580
=======
At December 31, 2000, the Company had an unsecured line of credit with a bank,
under which the Company may borrow up to $100,000 through May 31, 2001.
Interest on any borrowing is accrued at the bank's index rate plus 0.50
percentage points. The bank's index rate was 9.5% at December 31, 2000.
3. Income Taxes
------------
Income tax (benefit) provision consists of the following:
Year Ended December 31,
-----------------------------------
2000 1999 1998
------- ------- ------
Federal income taxes:
Current $ 84,168 $ -- $ --
Utilization of NOL's (84,168) -- --
Deferred (42,471) -- --
------- ------- -------
(42,471) -- --
------- ------- -------
State income taxes:
Current 8,437 1,125 1,125
Utilization of NOL's ( 7,207) -- --
Deferred -- -- --
------- ------- -------
1,230 1,125 1,125
------- ------- -------
Income tax (benefit) provision $(41,241) $ 1,125 $ 1,125
======= ======= =======
34
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
Differences exist between certain accounting policies and related provisions
included in federal income tax rules. The amounts by which these differences
and other factors cause the total income tax provision to differ from an
amount computed by applying the federal statutory income tax rate to financial
income is set forth in the following reconciliation:
Year Ended December 31,
-----------------------------------
2000 1999 1998
-------- -------- --------
Federal income tax expense
(benefit) at statutory rate $ 165,111 $( 16,299) $(180,390)
Net operating loss carryover ( 28,617) 20,658 183,591
Statutory depletion ( 86,571) -- --
Section 196(a) restoration of basis ( 39,765) ( 6,256) --
Valuation allowance 19,895 -- --
Expiration of investment tax credits ( 79,492) -- --
Other 8,198 3,022 (2,076)
-------- -------- --------
Income tax (benefit) provision $( 41,241) $ 1,125 $ 1,125
======== ======== ========
The components of net deferred tax asset (liability) are as follows:
December 31,
---------------------------------------
2000 1999 1998
----------- ----------- -----------
Current deferred taxes:
Gross assets $ 22,012 $ 75,650 $ 73,350
Gross liabilities -- -- --
---------- ---------- ----------
22,012 75,650 73,350
---------- ---------- ----------
Noncurrent deferred taxes:
Gross assets 3,022,856 3,193,122 3,121,533
Gross liabilities ( 56,992) ( 343,262) ( 435,430)
Valuation allowance (2,987,876) (2,967,981) (2,801,924)
---------- --------- ---------
( 22,012) ( 118,121) ( 115,821)
---------- --------- ---------
$ -- $( 42,471) $( 42,471)
========== ========= =========
35
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
The tax effect of significant temporary differences representing deferred tax
assets and (liabilities) are as follows:
December 31,
---------------------------------------
2000 1999 1998
----------- ----------- -----------
Accounts receivable $ 1,600 $ 1,600 $ 1,600
Inventory -- 55,200 55,200
Net operating loss
carry forwards 1,383,202 1,418,131 1,394,984
Investment tax credits 27,219 162,556 162,556
Statutory depletion
carryover 1,612,435 1,612,435 1,563,993
Accrued liabilities 20,412 18,850 16,550
---------- --------- ---------
Total deferred tax assets 3,044,868 3,268,772 3,194,883
Property and equipment ( 56,992) ( 343,262) ( 435,430)
Valuation allowance (2,987,876) (2,967,981) (2,801,924)
---------- --------- ---------
$ -- $( 42,471) $( 42,471)
========== ========= =========
At December 31, 2000, a valuation allowance has been provided against a
significant portion of the deferred tax assets generated by net operating loss
carryforwards, investment tax credits and the statutory depletion carryover
due to the uncertainty of their future utilization.
The Company has federal income tax net operating loss carry forwards of
approximately $3,935,000, which expire, to the extent not used, starting in
2001. For California franchise tax purposes, as of December 31, 2000, the
Company has unused net operating loss carryforwards of approximately $489,000,
a portion of which expire each year starting in 2001.
At December 31, 2000, the Company has, for federal income tax purposes, a
statutory depletion carryover of approximately $4,742,000, which currently
has no expiration date.
As of December 31, 2000, the Company has an investment tax credit carryforward
of approximately $27,000 available to reduce future taxes payable for
financial reporting and federal income tax purposes. Approximately $117,000
and $18,000 of these credits expired in 2000 and 1999, respectively. The
remaining $27,000 will expire in 2001 to the extent not used. Upon expiration,
the Company can claim a current deduction on their federal tax return.
36
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
4. Related-Party Transaction
-------------------------
Effective January 1, 1990, John H. Alexander, an officer and director of the
Company participated with a group of investors that acquired the mineral and
fee interest on one of the Company's oil and gas leases in the Carneros Creek
field after the Company declined to participate. The thirty-three percent
interest owned by Mr. Alexander represents a minority interest in the investor
group. Royalties on oil and gas production from this property paid to the
investor group approximated $124,000, $81,000 and $69,000 in 2000, 1999 and
1998, respectively.
5. Fourth Quarter Results (Unaudited)
---------------------------------
During the fourth quarter of 2000, 1999 and 1998, the Company adjusted the
provision for depletion, depreciation and amortization to reflect the
adjustments made to the Company's oil and gas reserves by independent
consultants. The effect of these adjustments was to increase net income by
approximately $24,000, $42,000 and $54,000 in 2000, 1999 and 1998,
respectively. The Company recorded an increase in valuation allowances of
$270,000 in the fourth quarter of 1998 due to an impairment in the value of
certain oil and gas properties (see Note 1 of Notes to Financial Statements,
Significant Accounting Policies, Costs Incurred in Oil and Gas Producing
Activities).
6. Commitments and Contingencies
-----------------------------
The Company is liable for future dismantlement and abandonment costs
associated with its oil and gas properties. These costs include future site
restoration, post closure and other environmental exit costs. The costs of
future dismantlement and abandonment have not been determined. Management
believes that these costs will not have a material adverse effect upon its
financial position or results of operations.
The Company is subject to certain litigation within the normal course of
business. In management's opinion, the resolution of such litigation would
not have a material adverse effect upon the financial position of the Company,
although the resolution in any reporting period of such litigation could have
a material impact on Pyramid's results of operations for that period.
37
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
During 1998, the Company entered into a joint venture project, with several
other oil and gas companies, to explore for and develop potential natural gas
reserves in the Solano County area of California. This project is employing
3-D seismic technology and exploratory drilling, in hopes of finding and
developing natural gas reserves on approximately 3,200 acres of leased ground.
The Company's position is that of a non-operator.
Drilling operations on the first well began early in the first quarter of
2000. This well encountered substantial mechanical problems prior to reaching
its intended depth and was abandoned due to these problems. The Company
participated in the drilling of a second well on this lease in the fourth
quarter of 2000. This well was abandoned due to insufficient gas reserves.
The Company has not made any decisions about participating in any future
proposed exploration wells on this project. The Company expended
approximately $18,000 for its share of costs on the first well during 1999.
The Company expended an additional $15,000 on the first well during 2000. The
Company expended approximately $18,000 for its share of costs on the second
well during 2000. These costs are recorded in Exploration Cost on the
Statements of Operations.
Late in the fourth quarter of 1998, the Company was notified by the United
States Environmental Protection Agency (EPA) that the Company was identified
as a "de minimis" contributor to the Casmalia Disposal Site in Santa Barbara
County, California. The EPA claimed that all parties who contributed to the
disposal site were potentially liable for a share of the cleanup costs.
After extensive examination of the EPA's documentation, upon which the EPA
based their claims, the Company determined that all of the materials sent to
the Casmalia disposal site, by the Company, between 1980 and 1983 were found
to be non-hazardous materials, specifically exempt under Federal and State
statutes, specifically CERCLA, Section 101(14), 42 U.S.C. Sec 9601(14). EPA
manifests identified over 97% of the materials sent by the Company to this
site as being PRODUCED waste oilfield water. The remaining 3% was composed of
water, crude oil and sand, from down-hole workover operations.
In December 1999, the Company formally responded to the EPA, by denying all of
the allegations and providing factual evidence in support of the Company's
position. Currently, the EPA's position is that it does not consider parties
that only sent petroleum wastes to the site liable. Therefore, management
does not believe that the Company is, or will be, liable for any cleanup
costs associated with the EPA's remediation of the Casmalia Disposal Site.
In April 2000, the Company was contacted by a law firm representing the
"Casmalia Steering Committee" requesting that the Company enter into a tolling
agreement to extend the statute of limitations associated with the Casmalia
Disposal Site. (The Steering Committee is a group of 54 public and private
entities, who compose the largest waste contributors to the Casmalia site and
under a 1997 Consent Decree with the United States, is committed to pay for
38
PYRAMID OIL COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
and/or preform certain cleanup activities at the Casmalia site.) The Steering
Committee proposed an 18-month extension of the statute of limitations that
were due to expire on June 27, 2000, in order to provide the Steering
Committee with additional time in which to sue the Company for alleged cleanup
contributions. Since the Company throughly investigated its position
concerning the issue of liability associated with the cleanup costs at the
Casmalia Disposal Site before replying to the EPA, (as discussed above) the
Company declined to enter into the Steering Committee's proposed tolling
agreement.
In July, the Company informally became aware that the Steering Committee filed
a Federal lawsuit on June 26, 2000, against approximately 450 parties involved
in the Casmalia site, including the Company. This suit is seeking
contributions for response costs and damages incurred and to be incurred at
the Casmalia Disposal Site. Through its legal counsel, the Company has
contacted the Steering Committee and has requested production of any factual
proof, supporting the claims and allegations made in the Steering Committee's
legal action. Subsequent to these events, the Company was dismissed from this
lawsuit by the Steering Committee.
7. Subsequent Event
----------------
In 1996, the Company filed a lawsuit in Kern County Superior Court, against
Mr. Russell R. Simonson, alleging a breach of a contractual agreement. The
lawsuit went to trial in 1997 and the trial court ruled that the Defendant
twice breached terms of an agreement, and the court awarded the Company
damages, interest and attorney's fees. The Defendant appealed the trial
court's decision and the matter was reviewed by the California Appeals Court.
In November 2000, the Appeals Court again ruled in favor of the Company,
upholding the original award of damages, interest and attorney's fees. On
March 5, 2001, the Company recorded a gain and received payment from the
Defendant in the amount of $395,708, concluding this matter.
39
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
OIL AND GAS PRODUCING ACTIVITIES
DECEMBER 31, 2000
-----------------------------------------------------------------------------
Statement of Financial Accounting Standards No. 19 (SFAS No. 19), "Financial
Accounting and Reporting by Oil and Gas Producing Companies", as amended,
requires disclosure of certain financial data for oil and gas operations and
reserve estimates of oil and gas. This information, presented here, is
intended to enable the reader to better evaluate the operations of the
Company. All of the Company's oil and gas reserves are located in the United
States.
The aggregate amounts of capitalized costs relating to oil and gas producing
activities and the related accumulated depletion, depreciation, and
amortization and valuation allowances as of December 31, 2000, 1999 and 1998
were as follows:
2000 1999 1998
---------- ---------- ----------
Proved properties $10,165,200 $10,189,100 $10,197,000
Unproved properties
being amortized 178,600 178,600 178,600
Unproved properties
not being amortized -- -- --
Accumulated depletion,
depreciation, amortization
and valuation allowances (9,887,300) (9,802,700) (9,632,600)
--------- --------- ---------
$ 456,500 $ 565,000 $ 743,000
========= ========= =========
40
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
The estimated quantities and the change in proved reserves, both developed and
undeveloped, for the Company are as follows:
2000 1999 1998
------------ ------------- -------------
Oil Gas Oil Gas Oil Gas
(MBbls) (MMCF) (MBbls) (MMCF) (MBbls) (MMCF)
----- ---- ----- ---- ----- ----
Proved reserves:
Beginning of year 361 65 384 127 462 169
Revisions of previous
estimates 51 16 61 (38) 2 ( 6)
Extensions, discoveries
and other additions -- -- -- -- 5 --
Production (71) ( 9) ( 84) (24) ( 85) (36)
---- ---- ---- ---- ---- ----
End of year 341 72 361 65 384 127
==== ==== ==== ==== ==== ====
Proved developed reserves:
Beginning of year 361 65 384 127 435 145
==== ==== ==== ==== ==== ====
End of year 341 72 361 65 384 127
==== ==== ==== ==== ==== ====
The foregoing estimates have been prepared by the Company from data prepared
by an independent petroleum engineer in respect to certain producing
properties. Revisions in previous estimates as set forth above resulted from
analysis of new information, as well as from additional production experience
or from a change in economic factors.
The reserve estimates are believed to be reasonable and consistent with
presently known physical data concerning size and character of the reservoirs
and are subject to change as additional knowledge concerning the reservoirs
becomes available.
41
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 2000
---------------------------------------------------------------------------
The present value of estimated future net revenues of proved developed
reserves, discounted at 10%, were as follows:
December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Proved developed reserves
(Present value before
income taxes) $2,311,000 $2,718,000 $1,001,000
========= ========= =========
SFAS No. 69, "Disclosures About Oil and Gas Producing Activities", requires
certain disclosures of the costs and results of exploration and production
activities and established a standardized measure of oil and gas reserves and
the year-to-year changes therein.
In addition to the foregoing disclosures, SFAS No. 69 established a
"Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Oil and Gas Reserves".
Costs incurred, both capitalized and expensed, of oil and gas property
acquisition, exploration and development for the years ended December 31,
2000, 1999 and 1998 were as follows:
2000 1999 1998
------- ------- -------
Property acquisition costs $ -- $ -- $ 14,000
Exploration costs 35,000 28,000 --
Development costs -- -- 201,000
42
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 2000
---------------------------------------------------------------------------
The results of operations for oil and gas producing activities for the years
ended December 31, 2000, 1999 and 1998 were as follows:
2000 1999 1998
---------- ---------- ----------
Sales $ 2,024,000 $ 1,309,000 $ 951,000
Production costs 1,031,000 800,600 826,800
Exploration costs 35,000 28,000 --
Depletion, depreciation,
and amortization 109,000 170,200 523,100
--------- --------- ---------
849,000 310,200 ( 398,900)
Income tax (benefit) provision ( 41,200) 1,200 1,200
--------- --------- ---------
Results of operations from
production activities $ 890,200 $ 309,000 $ ( 400,100)
========= ========= =========
The standardized measure of discounted estimated future net cash flows
relating to proved oil and gas reserves for the years ended December 31, 2000,
1999 and 1998 were as follows:
2000 1999 1998
---------- ---------- ----------
Future cash inflows $ 7,407,000 $10,401,000 $ 3,262,000
Future development and
production costs 3,848,000 6,906,000 1,973,000
Future income tax expense 12,000 12,000 12,000
---------- ---------- ----------
Future net cash flow 3,547,000 3,483,000 1,277,000
10% annual discount 1,244,000 775,000 286,000
Standardized measure ---------- ---------- ----------
of discounted future
net cash flow $ 2,303,000 $ 2,708,000 $ 991,000
========== ========== ==========
43
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 2000
-----------------------------------------------------------------------------
The principal changes in the standardized measure of discounted future net
cash flows during the years ended December 31, 2000, 1999 and 1998 were as
follows:
2000 1999 1998
---------- ---------- ----------
Extensions $ -- $ -- $ 11,000
Revisions of previous estimates
Price changes 373,000 1,739,000 (948,000)
Quantity estimate 423,000 403,000 2,000
Change in production rates,
timing and Other (480,000) ( 17,000) ( 56,000)
Development costs incurred -- -- 181,000
Changes in estimated future
development costs -- -- 19,000
Sales of oil and gas, net of
production costs (993,000) (508,000) (124,000)
Accretion of discount 272,000 100,000 174,000
---------- ---------- ----------
( 405,000) 1,717,000 ( 741,000)
Net change in income taxes -- -- --
---------- ---------- ----------
Net (decrease) increase $( 405,000) $ 1,717,000 $( 741,000)
========== ========== ==========
44
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 2000
------------------------------------------------------------------------------
Estimated future cash inflows are computed by applying year-end prices of oil
and gas to year-end quantities of proved reserves. Estimated future
development and production costs are determined by estimating the expenditures
to be incurred in developing and producing the proved oil and gas reserves at
the end of the year, based on year-end costs and assuming continuation of
existing economic conditions. Estimated future income tax expense is
calculated by applying the year-end effective tax rate to estimated future
pretax net cash flows related to proved oil and gas reserves, less the tax
basis of the properties involved.
These estimates are furnished and calculated in accordance with requirements
of the Financial Accounting Standards Board and the Securities and Exchange
Commission. Because of the unpredictable variances in expenses and capital
forecasts, crude oil and natural gas price changes being largely influenced
and controlled by United States and foreign governmental actions, and the fact
that the basis for such estimates vary significantly, management believes the
usefulness of these projections is limited. Estimates of future net cash
flows do not represent management's assessment of future profitability or
future actual cash flows of the Company.
It should be recognized that applying current costs and prices and a ten
percent standard discount rate allows for comparability but does not convey
absolute value. The discounted amounts arrived at are only one measure of
financial quantification of proved reserves.
The decrease of $741,000 in the Company's standardized measure of future net
cash flows for the year ended December 31, 1998 is due primarily to revisions
of previous estimates due to price changes. The changes in crude oil prices
at the end of each year has a significant impact on the valuation of the
Company's reserves and discounted future net cash flows. Lower crude oil
prices at the end of 1998 reduced the discounted future net cash flows by
approximately $948,000.
The increase in the standardized measure of discounted future net cash flows
at December 31, 1999 of $1,717,000 is due primarily to higher crude oil prices
at year end. The decrease in the standardized measure of discounted future
net cash flows at December 31, 2000 of $405,000 is due primarily to current
year production and sales of crude oil and natural gas.
45
PYRAMID OIL COMPANY
SUPPLEMENTAL INFORMATION (UNAUDITED)
QUARTERLY RESULTS
-----------------------------------------------------------------------------
2000 1999
---------- ----------
REVENUES:
Quarter Ended:
March 31 $ 455,058 $ 213,349
June 30 482,280 312,762
September 30 561,860 403,579
December 31 524,607 379,446
---------- ----------
$ 2,023,805 $ 1,309,136
========== ==========
NET INCOME (LOSS):
Quarter Ended:
March 31 $ 84,803 $( 92,081)
June 30 101,072 ( 41,361)
September 30 236,063 56,345
December 31 (a) 104,924 28,034
---------- ----------
$ 526,862 $( 49,063)
========== ==========
INCOME (LOSS) PER COMMON SHARE:
Quarter Ended:
March 31 $ .03 $ (.04)
June 30 .04 (.02)
September 30 .09 .02
December 31 (a) .05 .02
---------- ----------
$ .21 $ (.02)
========== ==========
(a) Adjustments to depletion, depreciation, amortization and valuation
allowances made by the Company are recorded in the fourth quarter amounts (see
Note 5 of Notes to Financial Statements included in Item 7 of this Form
10-KSB). The adjustments were required due to changes in estimates of oil and
gas reserves by independent consultants.
46
PYRAMID OIL COMPANY
CORPORATE INFORMATION
Board of Directors....J. Ben Hathaway, President, Pyramid Oil Company
John H. Alexander, Vice President, Pyramid Oil Company
John E. Turco, Private Investor
Thomas W. Ladd, Independent Oil Producer and Geologist
Gary L. Ronning, Independent Oil Producer and Geologist
Officers..............J. Ben Hathaway, President and Chairman of the Board
John H. Alexander, Vice President
Lee G. Christianson, Secretary-Treasurer
Accountants and
Business Advisors.....Arthur Andersen LLP - Los Angeles, California
Transfer Agent
and Registrar.........U.S. Stock Transfer Corp.
1745 Gardena Avenue, Suite 200
Glendale, California 91204
Corporate Offices.....2008 21st Street
Bakersfield, California 93302
District Offices......Bakersfield, California
Legal Counsel.........Troy & Gould - Los Angeles, California
Ganong Law Office - Bakersfield, California
Investor
Information...........Availability of Form 10-KSB: The Annual Report of
Pyramid Oil Company on Form 10-KSB, as filed with the
Securities and Exchange Commission, is available to any
stockholder upon request without charge. Please
address all such requests to:
Corporate Secretary
Pyramid Oil Company
P.O. Box 832
Bakersfield, California 93302
COMMON STOCK: The Company's common stock is traded on
the Over-The-Counter Bulletin Board market using symbol
PYOL.
47
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------------------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------
None
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
-----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
The Company hereby incorporates by reference the information to be contained
under the section entitled "Directors and Executive Officers" or a similarly
entitled section from its definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with its 2001 Annual Meeting
of Shareholders.
ITEM 10 - EXECUTIVE COMPENSATION
--------------------------------
The Company hereby incorporates by reference the information to be contained
under the section entitled "Compensation of Directors and Executive Officers"
or a similarly entitled section from its definitive Proxy Statement to be
filed with the Securities and Exchange Commission in connection with its 2001
Annual Meeting of Shareholders.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The Company hereby incorporates by reference the information to be contained
under the section entitled "Voting Securities and Principal Holders Thereof"
or a similarly entitled section from its definitive Proxy Statement to be
filed with the Securities and Exchange Commission in connection with its 2001
Annual Meeting of Shareholders.
48
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The information in Note 4 of Notes to Financial Statements included in Item 7
of this Form 10-KSB is incorporated herein by reference.
Effective January 1, 1990, John H. Alexander, an officer and director of the
Company participated with a group of investors that acquired the mineral and
fee interest on one of the Company's oil and gas leases in the Carneros Creek
field after the Company declined to participate. The thirty-three percent
interest owned by Mr. Alexander represents a minority interest in the
investor group. Royalties on oil and gas production from this property paid
to the investor group approximated $124,000 in 2000, $81,000 in 1999 and
$69,000 in 1998.
49
PART IV
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) 1. Financial Statements
--------------------
These documents are listed and included in Part II, Item 7 of this
report:
Report of Independent Public Accountants
Balance Sheets at December 31, 2000 and 1999.
Statements of Operations for the three years in the period
ended December 31, 2000.
Statements of Shareholders' Equity for the three
years in the period ended December 31, 2000.
Statements of Cash Flows for the three
years in the period ended December 31, 2000.
Notes to Financial Statements.
(a) 3. Exhibit
-------
3.1 Registrant's Articles of Incorporation (1)
3.2 Registrant's By Laws (1)
3.2.1 Registrant's Amendment to the By Laws (2)
10.1 Agreement and Plan of Reorganization and Corporate
Separation, dated January 1, 1987. (3)
16.1 Letter regarding the change in Registrant's certified
accountant. (4)
27 Financial Data schedule
(1) Incorporated by reference from Exhibits 18-1 and 18-2, respectively, to
the Registrant's 1971 Form 10.
(2) Incorporated by reference from the Registrant's August 25, 1986 Proxy
Statement.
(3) Incorporated by reference from Exhibit 1 to the Registrant's August 25,
1986 Proxy Statement.
(4) Incorporated by reference from Exhibit 1 to the Registrant's June 4,
1987 Form 8-K.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fourth quarter of 2000.
50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 28, 2001 By: J. BEN HATHAWAY
----------------------
J. Ben Hathaway
Director/President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
J. BEN HATHAWAY Director/President March 28, 2001
---------------------------
J. Ben Hathaway
JOHN H. ALEXANDER Director/Vice President March 28, 2001
---------------------------
John H. Alexander
THOMAS W. LADD Director March 28, 2001
---------------------------
Thomas W. Ladd
GARY L. RONNING Director March 28, 2001
---------------------------
Gary L. Ronning
Director March 28, 2001
---------------------------
John E. Turco
LEE G. CHRISTIANSON Corporate Secretary/ March 28, 2001
--------------------------- Principal Accounting Officer
Lee G. Christianson