Pyramid Petroleum and Capco Energy announce plan for business combination

    CALGARY and HOUSTON, June 11 /CNW/ - Pyramid Petroleum Inc. (TSXV: PYR)
("Pyramid" or the "Company") and Capco Energy, Inc (CGYN.PK) ("Capco")
announced today that their respective boards of directors have approved the
execution of a Letter of Intent whereby Pyramid would acquire all of the
outstanding common shares of Capco in exchange for common shares of Pyramid
("Common Shares"), as a result of which Capco will be a wholly owned
subsidiary of Pyramid. The number of Common Shares to be issued will be based
upon the net asset value ("NAV") of Pyramid and Capco, determined by, among
other factors, the discounted NAV of the oil and gas reserves of each company.
An independent committee will select an independent third party appraiser to
provide a fairness opinion on the transaction. Both companies have agreed to
abide by the results of this opinion. The completion of this business
combination will be subject to all necessary documentation, due diligence, and
regulatory and shareholder approvals.
    Capco is currently trading on the pink sheets in the US, but has not
filed current financial information with the appropriate regulatory
authorities. It anticipates that financial statements for the period ending
December 31, 2006 and March 31, 2007 will be completed and filed within two to
three months. A follow-up press release will be issued at that time. Capco's
reserve report as of December 31, 2006 is not prepared in accordance with
NI 51-101 guidelines and such evaluation is being conducted currently and the
results will be announced in a follow-up press release.
    Due diligence by both parties is on-going, and this transaction will be
subject to disinterested shareholder approval and review by the TSX Venture
Exchange. There is no assurance that the Exchange will accept the proposed
transaction, the disinterested shareholders will approve it, or that both
companies will be satisfied with their due diligence results.
    Mr. Ilyas Chaudhary, the majority shareholder in both companies, as well
as being the CEO of both companies, will not participate in the selection of
the third party appraiser for the transaction, nor will he vote on any issue
concerning this transaction. No other Capco directors have been identified at
this time to join the board of Pyramid.
    Following the transaction, Pyramid is expected to have the following key

    -   Operation of approximately 125 wells in the Gulf of Mexico.

    -   Ownership of producing onshore oil and gas assets in Texas, Montana
        and Alberta.

    -   A net undeveloped land position of 82,000 acres in various prolific

    -   Certain Gulf of Mexico prospects developed with 3-D seismic
        interpretation being marketed for exploratory drilling purposes.

    -   Primary business headquarters will be in Houston, Texas.

    Following the acquisition, Pyramid expects to raise funds to expand the
oil and gas production of the combined company, mainly in the Gulf of Mexico,
focusing on low risk producing opportunities.


    Use of the term barrels of oil equivalent ("boe") or thousands of cubic
feet of gas equivalent ("Mcfe") may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf: 1bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.

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

    Safe Harbor Statement under the Private Securities Litigation Reform Act:
Except for statements of historical fact, all statements in this press
release, without limitation, regarding new projects and future plans and
objectives are forward-looking statements which involve risks and
uncertainties, including uncertainty regarding future revenue and integration.
These and other risks are identified in our SEC filings and should be
considered in evaluating the forward-looking statements made herein. There can
be no assurance that such statements will prove to be accurate; actual results
and future events could differ materially from those anticipated in such
statements. These risks could cause actual financial results to vary from
those anticipated.

For further information:

For further information: Mansoor A. Anjum, President, Pyramid Petroleum,
Inc.,, (403) 234-9000,;
Robert Thomasson, COO, Capco Energy, Inc.,, (713)
622-5550,; Ken Wetherell, Investor Relations, Bryan Mills
Iradesso,, (403) 503-0144 x224

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