Pyramid Petroleum signs option to double production and reserves


    CALGARY, Jan. 31 /CNW/ - Pyramid Petroleum Inc. (TSXV: PYR) ("Pyramid" or
the "Company") today announced that it has entered into an Option Agreement to
purchase a 20 percent non-operated interest in a planned acquisition of
certain oil and gas properties in the Gulf of Mexico. The purchase would
complement Pyramid's current production of approximately 170 boe/d in the Gulf
of Mexico and would consolidate and increase the Company's reserve base in
that region. If Pyramid exercises its option as expected, the Company's
production would more than double, increasing to approximately 665 barrels of
oil equivalent per day ("boe/d") from current production of approximately
325 boe/d. In addition, the planned acquisition has substantial potential to
increase production by completing behind-pipe non-producing horizons. The
purchase would also increase Pyramid's proved and probable reserves to
approximately 2.71 million barrels oil equivalent ("MMboe"), adding proved and
probable reserves net to Pyramid of 1.38 MMboe, consisting of 0.49 MMboe
proved and 0.89 MMboe probable, calculated by independent engineers as of
September 1, 2006.
    The planned acquisition is a varying working interest, ranging from
5 percent to 20 percent, in 12 producing and 40 non-producing wells in the
Gulf of Mexico. Pyramid's 20 percent interest in the production would be
approximately 340 barrels of oil equivalent per day, consisting of 200 barrels
of oil per day ("bbls/d") and 850 thousand cubic feet of gas per day
("Mcf/d"). Pyramid's 20 percent share of the contracted purchase price would
be US$7 million. Pyramid plans to finance the acquisition with production
credits of approximately US$2.8 million, debt of US$3 million and a cash
payment of approximately US$1.2 million.

    About Pyramid

    Pyramid Petroleum is an oil and gas exploration and production company
based in Calgary, Alberta. The Company's focus is on development of domestic
and international hydrocarbon projects. Pyramid has non-operated working
interests in producing properties located in Alberta, Montana and the Gulf of
Mexico. The combined production net to Pyramid from these properties is
currently approximately 325 barrels of oil equivalent per day ("boe/d").
    The Company's shares are listed on the TSX Venture Exchange under the
symbol PYR.


    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.

    Except for statements of historical fact, all statements in this press
release, without limitation, regarding new projects and future plans and
objectives are forward-looking statements which involve risks and
uncertainties. There can be no assurance that such statements will prove to be
accurate; actual results and future events could differ materially from those
anticipated in such statements.

For further information:

For further information: Mansoor A. Anjum, President and CFO, Pyramid
Petroleum, Inc.,, (403) 234-9000,; Ken Wetherell, Investor Relations, Iradesso
Communications,, (403) 503-0144 x224

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