Total Q3 Revenue Increases 24% on 71% Increase in Oil & Gas Sales; Year-to-Date Operating Cash Flow up 177% to $3.2 Million Versus Year-Ago Period

BAKERSFIELD, CA -- (Marketwire) -- 11/17/08 -- Pyramid Oil Company (AMEX: PDO) today announced financial results for its third quarter and nine-month period ended Sept. 30, 2008.

Revenue from oil and gas sales increased 71% to $2.0 million versus $1.2 million in the third quarter a year ago. Total third quarter revenue increased 24% to $2.0 million from $1.6 million in last year's third quarter. Total revenue in last year's third quarter included a gain of $440,000 from the sale of certain fixed assets. Approximately 63% of the increase in oil and gas sales resulted from higher oil and gas prices, which increased by $40.41 per equivalent barrel of oil versus last year's third quarter. Roughly 8% of the increase resulted from higher crude production.

Operating income increased 12% to $860,000 versus $767,000 in the third quarter a year ago, while net income improved by 8% to $704,000, or $0.15 per diluted share, from $652,000, or $0.14 per diluted share, in the third quarter last year. Cash flow from operations at Sept. 30, 2008, was $3.2 million, up 177% versus $1.2 million at Sept. 30, 2007.

John Alexander, president and CEO, said, "Our strong third quarter revenue and earnings results allowed us to further enhance our financial position. Our balance sheet at Sept. 30 included more than $4.2 million in cash, cash equivalents and short-term investments, up from $2.9 million at the end of our second quarter, and $2.1 million at Dec. 31, 2007. We also have less than $30,000 in long-term debt and no obligatory capital projects scheduled. We have utilized cash on hand to upgrade certain wells, facilities and equipment, and in light of the recent steep decline in crude prices, we already have taken action to reduce operating costs and maintain our financial strength. We also are exploring opportunities for acquiring attractively priced production assets. We believe Pyramid is well positioned to weather the current pricing environment and capitalize on strategic opportunities to expand our asset portfolio."

In light of these declines, Mr. Alexander said Pyramid's Texas natural gas joint venture is not currently producing at anticipated levels. "The consensus opinion of the operator and JV participants is that the well has a 'skin damage' condition that is preventing gas from entering the well bore. The joint venture is currently considering a small workover program and acid job to address the problem."

Nine-month Results

Total revenue at the nine-month mark increased 61% to $5.7 million versus total revenue of $3.5 million in the same period a year ago. Last year's total nine-month revenue included the previously mentioned $440,000 gain from the sale of fixed assets. Nine-month operating income increased 137% to $2.8 million from $1.2 million in the same period a year ago. Net income increased 129% to $2.4 million, or $0.52 per diluted share, from $1.1 million, or $0.23 per diluted share, during the 2007 nine-month period.

About Pyramid Oil Company

Pyramid Oil Company has been in the oil and gas business continuously since incorporating in 1909. Pyramid acquires interests in land and producing properties through acquisition and lease, and then drills and/or operates crude or natural gas wells in an effort to discover or produce oil and/or natural gas. More information about the Company can be found at: http://www.pyramidoil.com.

Safe Harbor Statement

Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995, including statements regarding the completion and testing of wells. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Factors that could cause or contribute to such differences include, but are not limited to the value of crude oil or the performance of wells.

                            Pyramid Oil Company
                         Statements of Operations
                                (Unaudited)

                              Three months ended       Nine months ended
                                 September 30,           September 30,
                            ----------------------- -----------------------
                               2008        2007        2008        2007
                            ----------- ----------- ----------- -----------
REVENUES:
    Oil and gas sales       $ 1,999,119 $ 1,168,440 $ 5,712,201 $ 3,105,033
    Gain on sale of fixed
     assets                         500     440,473         500     440,473
                            ----------- ----------- ----------- -----------
                              1,999,619   1,608,913   5,712,701   3,545,506
                            ----------- ----------- ----------- -----------
COSTS AND EXPENSES:
    Operating expenses          548,991     417,901   1,433,274   1,189,214
    Exploration costs                 0       1,036     -28,812       6,687
    General and
     administrative             298,759     265,685     740,359     716,614
    Taxes, other than
     income and payroll
     taxes                       42,481      30,301      99,091      78,912
    Provision for
     depletion,
     depreciation and
     amortization               169,185     113,976     523,244     332,553
    Accretion expense            54,847       5,466      66,468      16,587
    Other costs and
     expenses                    25,643       7,589     101,215      31,641
                            ----------- ----------- ----------- -----------
                              1,139,906     841,954   2,934,839   2,372,208
                            ----------- ----------- ----------- -----------
OPERATING INCOME                859,713     766,959   2,777,862   1,173,298
                            ----------- ----------- ----------- -----------

OTHER INCOME (EXPENSE):
    Interest income              22,661      20,873      64,672      63,053
    Other income                  5,217       4,305      24,031      16,286
    Interest expense               -529         -75      -1,763      -1,872
                            ----------- ----------- ----------- -----------
                                 27,349      25,103      86,940      77,467
                            ----------- ----------- ----------- -----------
INCOME BEFORE INCOME
 TAX PROVISION                  887,062     792,062   2,864,802   1,250,765
    Income tax provision
     (benefit)
      Current                   -35,223     139,650     239,252     183,075
      Deferred                  218,000           0     179,000           0
                            ----------- ----------- ----------- -----------
                                182,777     139,650     418,252     183,075
                            ----------- ----------- ----------- -----------
NET INCOME                  $   704,285 $   652,412 $ 2,446,550 $ 1,067,690
                            =========== =========== =========== ===========
EARNINGS  PER COMMON SHARE
    Basic and diluted
     income per common
     share                  $      0.15 $      0.14 $      0.52 $      0.23
                            =========== =========== =========== ===========
Basic and diluted weighted
  average number of common
  shares outstanding          4,677,728   4,677,728   4,677,728   4,677,728
                            =========== =========== =========== ===========

                            PYRAMID OIL COMPANY
                              BALANCE SHEETS
                                  ASSETS

                                                September 30,  December 31,
                                                    2008          2007
                                                 (Unaudited)    (Audited)
                                                ------------- -------------
CURRENT ASSETS:
  Cash                                          $   1,956,085 $     618,448
  Short-term investments                            2,271,080     1,478,979
  Trade accounts receivable                           653,024       643,340
  Interest receivable                                   4,579         2,251
  Crude oil inventory                                  83,184        71,298
  Deferred income taxes                                72,000             0
  Prepaid expenses                                     54,175       170,913
                                                ------------- -------------
         TOTAL CURRENT ASSETS                       5,094,127     2,985,229
                                                ------------- -------------
PROPERTY AND EQUIPMENT, at cost
  Oil and gas properties and equipment
   (successful efforts method)                     15,715,290    14,734,929
  Capitalized asset retirement costs                  378,065       310,579
  Drilling and operating equipment                  2,080,127     2,050,556
  Land, buildings and improvements                  1,063,140     1,010,847
  Automotive, office and other
   property and equipment                           1,162,324     1,141,451
                                                ------------- -------------
                                                   20,398,946    19,248,362
  Less: accumulated depletion, depreciation,
   amortization and valuation allowance           -14,563,854   -14,040,610
                                                ------------- -------------
                                                    5,835,092     5,207,752
                                                ------------- -------------
OTHER ASSETS
  Deposits                                            250,000       250,000
  Other Assets                                          7,380         7,380
  Assets held for resale                                9,633         9,633
                                                ------------- -------------
                                                $  11,196,232 $   8,459,994
                                                ============= =============

                               PYRAMID OIL COMPANY
                                 BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                September 30,  December 31,
                                                     2008          2007
                                                  (Unaudited)    (Audited)
                                                ------------- -------------
CURRENT LIABILITIES:
  Accounts payable                              $      88,385 $     108,500
  Accrued professional fees                            71,790        54,165
  Accrued taxes, other than income taxes               38,122        61,684
  Accrued payroll and related costs                    53,713        57,647
  Accrued royalties payable                           209,130       212,916
  Accrued insurance                                     6,600        65,999
  Accrued income taxes                                166,357       145,815
  Current maturities of long-term debt                 23,670        26,868
                                                ------------- -------------
         TOTAL CURRENT LIABILITIES                    657,767       733,594
                                                ------------- -------------
LONG-TERM DEBT, net of current maturities              26,703        44,542
                                                ------------- -------------
DEFERRED TAXES                                        251,000             0
                                                ------------- -------------
LIABILITY FOR SHARE BASED COMPENSATION                      0        67,000
                                                ------------- -------------
LIABILITY FOR ASSET RETIREMENT OBLIGATION           1,144,857     1,010,903
                                                ------------- -------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
  Preferred stock-no par value;
   10,000,000 authorized shares;
   no shares issued or outstanding                          0             0
  Common stock-no par value;
   50,000,000 authorized shares;
   4,677,728 shares issued and
   outstanding                                      1,137,010     1,071,610
  Retained earnings                                 7,978,895     5,532,345
                                                ------------- -------------
                                                    9,115,905     6,603,955
                                                ------------- -------------

                                                $  11,196,232 $   8,459,994
                                                ============= =============