<PAGE> 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, 2001

/ /  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 ]





<PAGE> 2

State the registrant's revenues for its most recent fiscal year:  $1,680,074

   The aggregate market value on March 21, 2002, of voting shares held by
non-affiliates was approximately $1,073,000 based on the average closing sales
prices of the registrant's Common Stock on such date.

       At March 21, 2002, there were 2,494,430 shares of Common Stock
outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the registrant's definitive proxy statement for its 2002 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

<PAGE>
<PAGE> 3
                          PYRAMID OIL COMPANY

                    2001 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 .  . .  . .  . .  . .  . .         13

Item  4.    Submission of Matters to a Vote of
              Security Holders.  . .  . .  . .  . .  . .         13

                               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 . .  . .  . .  . .  . .         21

Item  8.    Changes In and Disagreements with Accountants on
              Accounting and Financial Disclosure .  . .         48

                               PART III

Item  9.    Directors, Executive Officers, Promoters and
              Control Persons; Compliance With Section
              16(a) of the Exchange Act .  . .  . .  . .         48

Item 10.    Executive Compensation .  . .  . .  . .  . .         48

Item 11.    Security Ownership of Certain Beneficial
              Owners and Management.  . .  . .  . .  . .         48

Item 12.    Certain Relationships and Related Transactions       49

                               PART IV

Item 13.    Exhibits and Reports on Form 8-K .  . .  . .         50





<PAGE> 4

CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 AND OTHER FEDERAL SECURITIES LAWS GENERAL.

Pyramid Oil Company is including the following discussion to inform existing
and potential security holders generally of some of the risks and
uncertainties that can affect the Company and to take advantage of the "safe
harbor" protection for forward-looking statements afforded under federal
securities laws.  Statements made in this Annual Report on Form 10-KSB may be
forward-looking statements.  In addition, from time to time, the Company may
otherwise make forward-looking statements to inform existing and potential
security holders about the Company.  These statements may include projections
and estimates concerning the timing and success of specific projects and the
Company's future (1) income, (2) oil and gas production, (3) oil and gas
reserves and reserve replacement and (4) capital spending.  Forward-looking
statements are generally accompanied by words such as "estimate," "project,"
"predict," "believe," "expect," "anticipate," "plan," "goal" or other words
that convey the uncertainty of future events or outcomes.  In addition, except
for the historical information contained in this report, the matters discussed
in this report are forward-looking statements.  These statements by their
nature are subject to certain risks, uncertainties and assumptions and will be
influenced by various factors.  Should any of the assumptions underlying a
forward- looking statement prove incorrect, actual results could vary
materially.


                                   PART I
                                   ------
ITEM 1 - DESCRIPTION OF BUSINESS
--------------------------------

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.  Although the Company owns some minor oil and
gas interests in New York and Wyoming, all of the Company's operations and
major revenue producing properties are in California.



<PAGE> 5

The Company's executive offices are located at 2008 21st Street, Bakersfield,
California, 93301, telephone (661) 325-1000, facsimile (661) 325-0100.


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.

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 27 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 2001, the Company operated 20 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.



<PAGE> 6

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.

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 123 wells, and of these, approximately 66 were in daily
operation during 2001.  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.

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 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 agreed to participate in
the drilling of a third natural gas well in conjunction with the same operator
in a new prospect area located in Solano County.  In the fourth quarter of
2001, this well commenced drilling.  The Company's share of the prospect fee
and drilling costs for this new well were approximately $36,000 during the
fourth quarter of 2001.  The third well was abandoned in the fourth quarter of
2001 due to inadequate gas reserves.  The Company has not received any
proposals to participate in a fifth well in this joint venture.

<PAGE> 7

During the second quarter of 2001, the Company entered into a new joint
venture project with several other independent oil and gas companies, to
explore for and develop potential oil reserves in the Gap Mountain area of
Nevada.  The Company's position is that of a non-operator.  During the second
quarter of 2001, the Company's share of the prospect fee for this project was
approximately $48,000.  During the fourth quarter of 2001, the Company
received a full and complete refund of the prospect fee.  This prospect was
cancelled by the operator after additional structural geology work and
analysis.


Marketing of Crude Oil and Natural Gas
--------------------------------------

The Company sells its crude oil to Kern Oil & Refining and Tosco Refining
Company, accounting for approximately 53.2% and 41.8%, respectively, of
Pyramid's crude oil and gas sales in 2001.  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.  Kern
Oil and Tosco Refining have been customers of the Company for over ten years.
Natural gas is sold to companies in the area of operations.  The Company sells
its oil pursuant to short-term contracts.  Accordingly, the amount of oil the
Company sells is dependent upon market demand.  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.


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
disadvantages 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.

<PAGE> 8

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.


REGULATIONS
-----------

The Company's business is affected by numerous 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.






<PAGE> 9

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.


OTHER
-----

The Company employed twelve full-time people as of December 31, 2001, four of
whom were office or administrative personnel, and the rest of whom were field
level personnel.  The Company contracts for additional labor services when
needed.  The Company is not a party to any union or labor contracts.

The Company had no material research and development costs for the three years
ended December 31, 2001.

All of the Company's revenues during 2001 were derived from domestic sources.

The Company does not have any patents or trademarks, and it does not believe
that its business or operations are dependent upon owning any patents or
trademarks.


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.  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, 2001, 2000 and 1999.






<PAGE> 10

(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:

<Table>
<Caption>
                                  Crude Oil          Natural Gas
                                    (BBLS)              (MCF)
                                  ---------          -----------
<S>                               <C>                <C>
     January 1, 2002               323,000              37,000
                2001               341,000              72,000
                2000               361,000              65,000
                1999               384,000             127,000
                1998               435,000             145,000
</Table>

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, 2002.

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 $1,250,000 at December 31, 2001,
$2,311,000 at December 31, 2000, $2,718,000 at December 31, 1999, $1,001,000
at December 31, 1998, and $1,688,000 at December 31, 1997.

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.

<Table>
<Caption>
                       2001      2000      1999       1998      1997
                       ----      ----      ----       ----      ----
<S>                  <C>       <C>       <C>         <C>       <C>
Crude oil (Bbls)      77,000    71,000    84,000     85,000     91,000

Natural gas (MCF)      9,000     9,000    24,000     36,000     35,000

</Table>







<PAGE> 11

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:

<Table>
<Caption>
                       2001       2000      1999      1998       1997
                       ----       ----      ----      ----       ----
<S>                   <C>        <C>       <C>       <C>        <C>
Sales price:
  Crude oil           $21.02     $26.16    $15.49    $10.73     $17.07
                       =====      =====     =====     =====      =====
  Natural gas         $ 4.80     $ 3.14    $ 1.82    $ 1.64     $ 1.99
                       =====      =====     =====     =====      =====

Production costs      $13.30     $13.60    $ 8.70    $ 8.60     $ 9.90
                       =====      =====     =====     =====      =====
</Table>

The average selling price of Pyramid's crude oil at December 31, 2001, was
approximately $14.90 per barrel and the average selling price of Pyramid's gas
at December 31, 2001, was approximately $2.20 per MCF.

As of December 31, 2001, Pyramid had the following gross and net position in
wells and proved acres:

<Table>
                         WELLS                    PROVED ACRES
                   -----------------           -----------------
                   Gross (1)  Net (1)          Gross (2)  Net (2)
                   --------   ------           --------   ------
                   <C>        <C>              <C>        <C>
                     147       123              22,015     6,287
                     ===       ===              ======     =====
</Table>

    (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.







<PAGE> 12

During the year ended December 31, 1997, Pyramid participated in the drilling
of 1 well.  This well was drilled in California and completed as a producing
well.  No wells were drilled in 2001, 2000, 1999 and 1998, although the
Company did participate as a non-operator in 2001 and 2000 in the drilling of
joint-venture 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, 2001, Pyramid held positions in unproven acreage in the
following locations:

<Table>
<Caption>
                                                       ACRES
                                                 ------------------
                                                  Gross        Net
                                                 ------      ------
<S>                                              <C>         <C>
New York
    Mount Morris and Livingston Counties         34,800       9,788
                                                 ======       =====
</Table>


(c)  REAL PROPERTY OWNED
    -------------------

Pyramid owned the following real property as of December 31, 2001, 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.





<PAGE> 13

ITEM 3 - LEGAL PROCEEDINGS
--------------------------

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. 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 2001.


                                  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 OTC Bulletin Board under the
symbol "PYOL".  The following are high and low sales prices for each quarter
of 2001 and 2000, and reflect inter-dealer prices without retail markup,
markdown or commission.

<Table>
<Caption>
                                        High         Low
                                        ----        -----
<S>                                    <C>         <C>
    Fiscal Quarter Ending 2001
         March 31,                    $1.0000      $0.6875
         June 30,                      1.4000       0.8200
         September 30,                 1.1500       0.9100
         December 31,                  1.0100       0.6000
    Fiscal Quarter Ending 2000
         March 31,                     1.2500       0.3750
         June 30,                      1.0000       0.2813
         September 30,                 1.0100       0.6250
         December 31,                  1.0313       0.6875

</Table>


<PAGE> 14

At December 31, 2001, the Company had 712 shareholders of record, and an
unknown number of additional holders whose stock is held in "street name".

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.

The Company did not sell any securities during 2001.



ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
         CONDITION AND RESULTS OF OPERATIONS
         -----------------------------------

IMPACT OF CHANGING PRICES
-------------------------

Average prices decreased by approximately $5.00 per equivalent crude oil and
gas barrel sold during 2001 as compared with average prices for 2000.  In 2001
there were 81 separate crude oil price changes, as compared with 100 price
changes in 2000.  The difference between the highest and lowest posted prices
in 2001 was $12.50 per barrel.  By comparison, this same differential in 2000
and 1999 was $13.65 and $15.50 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
-------------------------------

The Company had cash and cash equivalents of $614,416 at December 31, 2001 for
an increase of $12,689 when compared to December 31, 2000.  Operating
activities in 2001 provided cash of $717,410.  Included in the cash generated
from operating activities is a one-time gain on settlement of a lawsuit (see
Note 7, Other Income, included in Item 7 of this Form 10-KSB).  Capital
spending of $202,595, purchase of short-term investments of $600,000 and
principal payments on the Company's long-term debt totaling $71,727 used cash
in 2001.  This was offset by proceeds from sale of property and equipment of
$114,600 and issuance of long-term debt of $55,001.  The components of the
changes in cash for 2001 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, 2001, provided
additional liquidity during 2001.



<PAGE> 15

The Company believes that its existing current assets and the amount of cash
it anticipates it will generate from current operations will be sufficient to
fund the anticipated liquidity and capital resource needs of the Company for
the fiscal year ended December 31, 2002.  In addition to its current assets,
the Company also has a credit facility for $100,000 available in the event
that it needs other resources to fund its liquidity and capital resource
needs.  Although the Company may increase its capital expenditures during the
current fiscal year to enhance its current oil production capacities, it does
not anticipate that such expenditures would exceed the amount of liquidity
currently available to the Company.  The Company's beliefs that its existing
assets and the cash expected to be generated from operations will be
sufficient during the current fiscal year are based on the following:

     As of December 31, 2001, the amount of cash, cash equivalents, and other
     current assets was equal to $1,783,000 in the aggregate.  This amount is
     equal to approximately all of the operating expenses that the Company
     incurred during the entire fiscal year ended December 31, 2001.

     As of December 31, 2001, the Company had approximately $1,783,000 in
     current assets, and only $252,000 of current liabilities.

     As of December 31, 2001, the Company had only $24,000 of long-term
     indebtedness (net of current maturities).

The Company is not a party to off-balance sheet arrangements and does not
engage in trading activities involving non-exchange traded contracts.  In
addition, the Company has no financial guarantees, debt or lease agreements or
other arrangements that could trigger a requirement for an early payment or
that could change the value of the Company's assets.  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, such as idle work-over rigs, 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 the
three years ended December 31, 2001. The Company's crude oil reserves declined
for the years ended December 31, 2001, 2000 and 1999, due primarily to
production of existing reserves.

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.



<PAGE> 16

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.


FORWARD-LOOKING INFORMATION
---------------------------

Looking forward into 2002, crude oil prices have increased by $6.90 per barrel
as of March 27, 2002, compared to prices at December 31, 2001.  There have
been 24 separate price changes since December 31, 2001.  The Company is unable
to predict any future price changes that would impact the remainder of 2002.

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 2002,
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 absorb the costs for various state and local fees and
permits under new environmental programs, the sum of which were not material
during 2001.  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.



<PAGE> 17

ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS
--------------------------------------------------------

Results of Operations for the Fiscal Year Ended December 31, 2001
Compared to the Fiscal Year Ended December 31, 2000
---------------------------------------------------

REVENUES
--------

Oil and gas sales decreased by 17% for the year ended December 31, 2001, when
compared with the same period for 2000.  Oil and gas sales decreased by 20%
due to lower average prices for 2001.  The average price of the Company's oil
and gas decreased by approximately $5.00 per equivalent barrel for 2001 when
compared to 2000.  The decrease in revenues due to unfavorable prices was
offset by a 3% increase in crude oil production for 2001.  Production for 2001
increased by approximately 2,400 barrels when compared with production in
2000.


OPERATING EXPENSES
------------------

Operating expenses increased by approximately 6% for the year ended December
31, 2001 when compared with the same period of 2000.  The cost to produce an
equivalent barrel of crude oil increased by approximately thirty cents per
barrel for 2001 when compared to 2000.  Operating parts and supplies increased
by approximately 5% due primarily to the costs of certain down-hole tubular
goods purchased in 2001, no similar tubular supplies were purchased in 2000.
Labor costs increased by approximately 3% due primarily to the addition of one
new field employee.  Utilities increased by approximately 3% due primarily to
increased utility rates.  These were offset by decreases in outside services
and well abandonment costs of approximately 3% each.


GENERAL AND ADMINISTRATIVE
--------------------------

General and administrative expenses decreased by 2% for the year ended
December 31, 2001 when compared to the same period for 2000 due primarily to
lower costs for legal services.


DEPLETION, DEPRECIATION, AMORTIZATION
  AND VALUATION ALLOWANCE
-------------------------------------

The provision for depletion, depreciation and amortization increased by 1%
for the year ended December 31, 2001, when compared with the same period for
2000.  The increase is due primarily to an increase in crude oil production
offset by a decline in the depletion rate for oil and gas properties.

<PAGE> 18

OTHER INCOME
------------

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.

Interest income increased by approximately $34,000 due primarily to higher
levels of short-term investments during 2001.  The gain on the sale of fixed
assets increased by approximately $16,000 due primarily to the sale of surplus
well servicing equipment.


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.




<PAGE> 19

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.


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.


Recent Accounting Developments
------------------------------

In June 2001, the FASB issued Statements of Financial Accounting Standards No.
141 ("FAS 141") "Business Combinations" and No. 142 ("FAS 142") "Goodwill and
Other Intangible Assets".  These statements eliminate the pooling of interests
method of accounting for business combinations as of June 30, 2001 and
eliminate the amortization of goodwill for all fiscal years beginning after
December 15, 2001.  Goodwill will be accounted for under an impairment-only
method after this date.  The Company is required to adopt FAS 141 and 142 with
respect to existing goodwill on January 1, 2002.  Management believes the
adoption of these Statements will not have a significant impact on the
Company's financial position, results of operations or cash flows.

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143 ("FAS 143") "Accounting for Asset Retirement Obligations".  This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated retirement
costs.  Asset retirement obligations will be initially measured at fair value.
These obligations will be discounted and accretion expense will be recognized
using the credit adjusted risk-free interest rate.  The Company is required to
adopt FAS 143 on January 1, 2003.  The Company is assessing the impact FAS 143
will have on its financial statements.

<PAGE> 20

In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144 ("FAS 144") "Accounting for the Impairment or Disposal of Long-Lived
Assets".  This Statement supercedes previous statements related to impairment.
The requirements to allocate goodwill to long-lived assets to be tested for
impairment is eliminated.  A primary asset approach to determine a cash flow
estimation period is established.  The Company is required to adopt FAS 144 on
January 1, 2002.  The Company is assessing the impact FAS 144 will have on its
financial statements.  
<PAGE>
<PAGE> 21


ITEM 7- FINANCIAL STATEMENTS
-----------------------------

                           PYRAMID OIL COMPANY

                      INDEX TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2001

                                                                     Page

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . .   22


FINANCIAL STATEMENTS:

    Balance sheets - December 31, 2001 and 2000 . . . . . . . . . .   23-24
    Statements of operations - years ended
      December 31, 2001, 2000 and 1999  . . . . . . . . . . . . . .   25
    Statements of shareholders' equity - years ended
      December 31, 2001, 2000 and 1999  . . . . . . . . . . . . . .   26
    Statements of cash flows - years
      ended December 31, 2001, 2000 and 1999  . . . . . . . . . . .   27-28
    Notes to financial statements . . . . . . . . . . . . . . . . .   29


<PAGE>
<PAGE> 22

                 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, 2001 and 2000, and the related
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 2001.  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, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States.


ARTHUR ANDERSEN LLP


Los Angeles, California
March 1, 2002
<PAGE>
<PAGE> 23
                             FINANCIAL STATEMENTS
                              PYRAMID OIL COMPANY

                                BALANCE SHEETS
-----------------------------------------------------------------------------


                                    ASSETS
                                    ------
<Table>
<Caption>
                                                 December 31,
                                          --------------------------
                                             2001            2000
                                          ----------    ------------
<S>                                      <c>             <c>

CURRENT ASSETS:
   Cash and cash equivalents            $   614,416      $    601,727
   Short-term investments                   850,000           250,000
   Trade accounts receivable
     (net of reserve for doubtful
     accounts of $4,000 in 2001
     and 2000)                              109,993           192,243
   Interest receivable                       51,488            20,471
   Crude oil inventory                       47,555            56,156
   Prepaid expenses                          93,590            84,230
   Deferred income taxes                     15,490            22,012
                                          ---------        ----------
         Total current assets             1,782,532         1,226,839
                                          ---------        ----------
PROPERTY AND EQUIPMENT, at cost:
   Oil and gas properties and
     equipment (successful
     efforts method)                     10,293,558        10,343,773
   Drilling and operating equipment       2,872,762         3,118,778
   Land, buildings and improvements         936,681           921,767
   Automotive, office and
     other property and equipment           933,090         1,067,625
                                         ----------        ----------
                                         15,036,091        15,451,943
   Less - accumulated depletion,
     depreciation, amortization
     and valuation allowances           (13,497,392)      (13,846,912)
                                         ----------        ----------
                                          1,538,699         1,605,031
                                         ----------        ----------
                                        $ 3,321,231       $ 2,831,870
                                         ==========        ==========

The accompanying notes are an integral part of these balance sheets.

</Table>

<PAGE> 24

                              PYRAMID OIL COMPANY

                                BALANCE SHEETS
-----------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
<table>
<Caption>
                                                 December 31,
                                          ----------------------------
                                              2001              2000
                                          ----------        ----------
<S>                                       <C>               <C>
CURRENT LIABILITIES:
   Accounts payable                     $    54,057        $    66,362
   Accrued professional fees                 15,500             18,750
   Accrued taxes, other than
     income taxes                            30,717             22,645
   Accrued payroll and related costs         36,351             36,040
   Accrued royalties payable                 59,548             82,621
   Accrued insurance                         40,689             29,864
   Current maturities of long-term debt      15,409             27,500
                                          ---------         ----------
      Total current liabilities             252,271            283,782
                                          ---------         ----------

LONG-TERM DEBT, net of current
 maturities                                  24,445             29,080
                                          ---------         ----------
DEFERRED INCOME TAXES                        15,490             22,012
                                          ---------         ----------
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                      1,957,415          1,425,386
                                         ----------         ----------
                                          3,029,025          2,496,996
                                         ----------         ----------

                                        $ 3,321,231        $ 2,831,870
                                         ==========         ==========

The accompanying notes are an integral part of these balance sheets.


</Table>

<PAGE> 25
                             PYRAMID OIL COMPANY
                           STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------
<Table>
<Caption>
                                              Year ended December 31,
                                       --------------------------------------
                                          2001          2000          1999
                                       ----------    ----------    ----------
<S>                                    <C>          <C>           <C>
REVENUES:                             $ 1,680,074   $ 2,023,805   $ 1,309,136
                                       ----------    ----------    ----------
COSTS AND EXPENSES:
  Operating expenses                    1,053,583       991,232       760,744
  Exploration costs                        43,527        35,423        27,976
  General and administrative              359,854       368,332       299,245
  Taxes, other than income and
    payroll taxes                          59,695        52,077        51,744
  Provision for depletion,
    depreciation, amortization
    and valuation allowance               185,660       184,036       240,017
  Other costs and expenses                 16,156        13,593        11,093
                                        ---------     ---------    ----------
                                        1,718,475     1,644,693     1,390,819
                                        ---------     ---------    ----------
OPERATING (LOSS) INCOME                  ( 38,401)      379,112      ( 81,683)
                                        ---------     ---------    ----------
OTHER INCOME (EXPENSE):
  Interest income                          58,520        24,538        11,104
  Gain on settlement                      395,708            --            --
  Gain on sales of property
    and equipment                          74,860        58,605            --
  Other income                             45,561        28,696        29,465
  Interest expense                     (    3,194)   (    5,330)   (    6,824)
                                       ----------     ---------     ---------
                                          571,455       106,509        33,745
                                       ----------     ---------     ---------
INCOME (LOSS) BEFORE INCOME
 TAX PROVISION (BENEFIT)                  533,054       485,621     (  47,938)
  Income tax provision (benefit)            1,025     (  41,241)        1,125
                                       ----------     ---------     ---------
NET INCOME (LOSS)                     $   532,029   $   526,862   $ (  49,063)
                                       ==========     =========     =========
BASIC INCOME (LOSS)PER COMMON SHARE   $       .21   $       .21   $      (.02)
                                       ==========     =========     =========
DILUTED INCOME (LOSS)PER COMMON SHARE $       .21   $       .21   $      (.02)
                                       ==========     =========     =========
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.

</Table>
<PAGE> 26

                              PYRAMID OIL COMPANY

                       STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------



<Table>
<Caption>

                              Common Shares
                               Issued and         Common         Retained
                               Outstanding         Stock         Earnings
                              -------------      ----------     ----------
<S>                           <C>                <C>            <C>

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

  Net income                            --               --        532,029
                                 ---------        ---------      ---------
Balances, December 31, 2001      2,494,430       $1,071,610     $1,957,415
                                 =========        =========      =========


The accompanying notes are an integral part of these statements.

</Table>
<PAGE>
<PAGE> 27
                            PYRAMID OIL COMPANY
                          STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------

<Table>
<Caption>
                                               Year ended December 31,
                                          --------------------------------
                                             2001       2000        1999
                                          ---------   --------    --------
<S>                                       <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                       $ 532,029  $ 526,862    $( 49,063)
  Adjustments to reconcile net income
    (loss) to net cash provided
    by operating activities:
      Provision for depletion,
        depreciation, amortization
        and valuation allowance             185,660    184,036      240,017
      Exploration costs                      43,527     35,423       27,976
      Gain on sale of
        property and equipment              (74,860)   (58,605)          --
      Deferred income tax benefit                --    (42,471)          --
  Changes in operating assets
    and liabilities:
      Decrease (increase) in trade
        accounts receivable                  51,233   ( 27,847)    (107,552)
      Decrease (increase) in crude
        oil inventories                       8,601   ( 21,003)       3,218
      (Increase) decrease
        in prepaid expenses                 ( 9,360)  ( 16,781)      13,679
      (Decrease) increase in
         accounts payable and
         accrued liabilities                (19,420)    40,414       25,661
                                            -------    -------      -------
  Net cash provided by
    operating activities                    717,410    620,028      153,936
                                            -------    -------      -------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Capital expenditures                     (202,595)  (175,530)    ( 41,605)
  Proceeds from sale of
    property and equipment                  114,600     62,750           --
  Net change in short-term investments     (600,000)  ( 50,000)     100,000
                                            -------    -------      -------
  Net cash (used in) provided by
    investing activities                   (687,995)  (162,780)      58,395
                                            -------    -------      -------

      The accompanying notes are an integral part of these statements.

</Table>

<PAGE> 28
                                PYRAMID OIL COMPANY

                              STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
-----------------------------------------------------------------------------


<Table>
<Caption>

                                              Year ended December 31,
                                           ------------------------------
                                              2001      2000        1999
                                            -------    -------    -------
<S>                                         <C>        <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on line
    of credit                                    --   ( 48,000)   (181,650)
  Proceeds from line of credit                   --     48,000      81,650
  Principal payments on long-term
    debt                                   ( 71,727)  ( 50,296)   ( 20,873)
  Proceeds from issuance of long-term debt   55,001     85,000          --
                                            -------    -------     -------
  Net cash (used in) provided by
    financing activities                   ( 16,726)    34,704    (120,873)
                                            -------    -------     -------
Net increase in cash
  and cash equivalents                       12,689    491,952      91,458

Cash and cash equivalents
  at beginning of year                      601,727    109,775      18,317
                                            -------    -------     -------
Cash and cash equivalents at end of year  $ 614,416  $ 601,727   $ 109,775
                                            =======    =======     =======
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the year
  for interest                            $   3,194  $   5,330   $   6,824
                                            =======    =======     =======
Cash paid during the year
  for income taxes                        $   1,025  $   1,230   $   1,125
                                            =======    =======     =======

The accompanying notes are an integral part of these statements.

</Table>






<PAGE> 29
                                 PYRAMID OIL COMPANY
                            NOTES TO FINANCIAL STATEMENTS
                                  DECEMBER 31, 2001
----------------------------------------------------------------------------

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 27 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 accounting
principles generally accepted in the United States 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.

Investments
-----------

Investments consist of certificates of deposit having original maturities of
three months or more and are valued at cost.

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.





<PAGE> 30

                                 PYRAMID OIL COMPANY
                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001

----------------------------------------------------------------------------


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.  There were no material impairment reserves recorded in the three
years ended December 31, 2001.








<PAGE> 31

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2001
------------------------------------------------------------------------------


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 2001, 2000 and 1999
were $1.30, $1.49 and $1.94, 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.






<PAGE> 32

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2001
------------------------------------------------------------------------------


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 53.2%, and 41.8%, respectively, of
Pyramid's crude oil and gas sales in 2001.  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. Trade
receivables were approximately 42.6% and 48.0% attributable to Kern Oil and
Refining and Tosco Refining respectively at December 31, 2001 and 36.9% and
58.6% respectively at December 31, 2000.

New Accounting Pronouncements
-----------------------------

In June 2001, the FASB issued Statements of Financial Accounting Standards No.
141 ("FAS 141") "Business Combinations" and No. 142 ("FAS 142") "Goodwill and
Other Intangible Assets".  These statements eliminate the pooling of interests
method of accounting for business combinations as of June 30, 2001 and
eliminate the amortization of goodwill for all fiscal years beginning after
December 15, 2001.  Goodwill will be accounted for under an impairment-only
method after this date.  The Company is required to adopt FAS 141 and 142 with
respect to existing goodwill on January 1, 2002.  Management believes the
adoption of these Statements will not have a significant impact on the
Company's financial position, results of operations or cash flows.







<PAGE> 33

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2001
------------------------------------------------------------------------------


In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143 ("FAS 143") "Accounting for Asset Retirement Obligations".  This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated retirement
costs.  Asset retirement obligations will be initially measured at fair value.
These obligations will be discounted and accretion expense will be recognized
using the credit adjusted risk-free interest rate.  The Company is required to
adopt FAS 143 on January 1, 2003.  The Company is assessing the impact FAS 143
will have on its financial statements.

In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144 ("FAS 144") "Accounting for the Impairment or Disposal of Long-Lived
Assets".  This Statement supercedes previous statements related to impairment.
The requirements to allocate goodwill to long-lived assets to be tested for
impairment is eliminated.  A primary asset approach to determine a cash flow
estimation period is established.  The Company is required to adopt FAS 144 on
January 1, 2002.  The Company is assessing the impact FAS 144 will have on its
financial statements.


Reclassifications
-----------------

Reclassifications have been made to the financial statements for 2000 to
conform to the 2001 presentation.





<PAGE>
<PAGE> 34
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
------------------------------------------------------------------------------

2.  Long-Term Debt and Line of Credit

Long-term debt at December 31, 2001 and 2000, is summarized as follows:

<Table>                                                  December 31,
<Caption>                                           ----------------------
                                                       2001         2000
                                                    ---------    ---------
<S>                                                 <C>          <C>
  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.  Note paid-off early
    in 2001.                                         $     --     $ 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 2002.  Note paid-off early
    in 2001                                                --       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.  Note paid-off early
    in 2001.                                               --       13,399

  Note payable to GMAC, secured by equipment
    purchased with the proceeds of the loan,
    payable in monthly installments of $1,111
    principal only, zero interest charges,
    final payment in 2004.                             37,779           --

  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 8.75%,
    final payment in 2002.                              2,075           --
                                                      -------      -------
                                                       39,854       56,580
  Less - current maturities                          ( 15,409)    ( 27,500)
                                                      -------      -------
                                                     $ 24,445     $ 29,080
                                                      =======      =======
</Table>

<PAGE> 35
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------

At December 31, 2001 approximately $69,000 of gross property and equipment
was pledged as collateral to secure approximately $39,900 principal amount of
long-term debt.

Maturities of long-term debt are as follows:
<Table>
<Caption>
            <S>                                      <C>
            Year ending December 31, 2002            $ 15,409
                                     2003              13,332
                                     2004              11,113
                                                      -------
                                                     $ 39,854
                                                      =======
</Table>

At December 31, 2001, the Company had an unsecured line of credit with a bank,
under which the Company may borrow up to $100,000 through May 31, 2002.
Interest on any borrowing is accrued at the bank's index rate plus 0.50
percentage points.  The bank's index rate was 4.75% at December 31, 2001.

3.   Income Taxes
     ------------
   Income tax provision (benefit) consists of the following:
<Table>
<Caption>
                                            Year Ended December 31,
                                      -----------------------------------
                                       2001           2000          1999
                                      -------        -------       ------
<S>                                  <C>            <C>           <C>
   Federal income taxes:
     Current                        $ 110,704       $ 84,168      $     --
     Utilization of NOL's            (110,704)       (84,168)           --
     Deferred                              --        (42,471)           --
                                      -------        -------       -------
                                           --        (42,471)           --
                                      -------        -------       -------
   State income taxes:
     Current                           25,912          8,437         1,125
     Utilization of NOL's             (24,887)       ( 7,207)           --
     Deferred                              --             --            --
                                      -------        -------       -------
                                        1,025          1,230         1,125
                                      -------        -------       -------
   Income tax provision (benefit)    $  1,025       $(41,241)     $  1,125
                                      =======        =======       =======
</Table>

<PAGE> 36
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------

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:
<Table>
<Caption>
                                                Year Ended December 31,
                                          -----------------------------------
                                            2001         2000          1999
                                          --------     --------      --------
<S>                                     <C>          <C>           <C>
   Federal income tax expense
     (benefit) at statutory rate         $ 181,238    $ 165,111     $( 16,299)
   Net operating loss carryover           (110,704)    ( 28,617)       20,658
   Statutory depletion                    ( 55,273)    ( 86,571)           --
   Section 196(a) restoration of basis    (  9,256)    ( 39,765)     (  6,256)
   Valuation allowance                          --       19,895            --
   Expiration of investment tax credits         --     ( 79,492)           --
   Other                                  (  4,980)       8,198         3,022
                                          --------     --------      --------
   Income tax provision (benefit)        $   1,025    $( 41,241)    $   1,125
                                          ========     ========      ========
</Table>
The components of net deferred tax asset (liability) are as follows:
<Table>
<Caption>
                                             December 31,
                               ---------------------------------------
                                   2001          2000          1999
                               -----------   -----------   -----------
<S>                           <C>             <C>           <C>
Current deferred taxes:
  Gross assets                $     15,490   $    22,012   $    75,650
  Gross liabilities                     --            --            --
                                ----------    ----------    ----------
                                    15,490        22,012        75,650
                                ----------    ----------    ----------
Noncurrent deferred taxes:
  Gross assets                   2,432,954     3,022,856     3,193,122
  Gross liabilities              (  53,548)     ( 56,992)    ( 343,262)
  Valuation allowance           (2,394,896)   (2,987,876)   (2,967,981)
                                ----------     ---------     ---------
                                  ( 15,490)   (   22,012)   (  118,121)
                                ----------     ---------     ---------
                               $        --   $        --   $(   42,471)
                                ==========     =========     =========
</Table>

<PAGE> 37
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------

The tax effect of significant temporary differences representing deferred tax
assets and (liabilities) are as follows:

<Table>
<Caption>
                                                  December 31,
                                    ---------------------------------------
                                        2001          2000          1999
                                    -----------   -----------   -----------
<S>                                <C>            <C>           <C>
    Accounts receivable             $     1,600    $    1,600   $     1,600
    Inventory                                --            --        55,200
    Net operating loss
      carry forwards                    820,519     1,383,202     1,418,131
    Investment tax credits                   --        27,219       162,556
    Statutory depletion
      carryover                       1,612,435     1,612,435     1,612,435
    Accrued liabilities                  13,890        20,412        18,850
                                     ----------     ---------     ---------
    Total deferred tax assets         2,448,444     3,044,868     3,268,772
    Property and equipment            (  53,548)     ( 56,992)    ( 343,262)
    Valuation allowance              (2,394,896)   (2,987,876)   (2,967,981)
                                     ----------     ---------     ---------
                                    $        --   $        --   $(   42,471)
                                     ==========     =========     =========
</Table>

At December 31, 2001, a valuation allowance has been provided against a
significant portion of the deferred tax assets generated by net operating loss
carryforwards 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 $2,355,000, which expire, to the extent not used, starting in
2002 through 2019.  For California franchise tax purposes, as of December 31,
2001 the Company has unused net operating loss carryforwards of approximately
$214,000, a portion of which expire each year starting in 2002.

At December 31, 2001, 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, 2001, the Company has no investment tax credit carryforward
available to reduce future taxes payable for financial reporting and federal
income tax purposes.  Approximately $27,000, $117,000 and $18,000 of these
credits expired in 2001, 2000 and 1999, respectively.  Upon expiration, the
Company can claim a current deduction on their federal tax return.

<PAGE> 38
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------

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 $98,000, $124,000 and $81,000 in 2001, 2000 and
1999, respectively.


5. Fourth Quarter Results (Unaudited)
   ---------------------------------

During the fourth quarter of 2000 and 1999, 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 and
$42,000 in 2000 and 1999, respectively.


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.










<PAGE> 39
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------

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 expended approximately $18,000 for its share of costs on the first
well during 1999, and expended an additional $15,000 during 2000.  The Company
expended approximately $18,000 for its share of costs on the second well
during 2000. These costs are recorded in Costs and Expenses on the Statements
of Operations.

The Company agreed to participate in the drilling of a third natural gas well
in conjunction with the same operator in a new prospect area located in
Solano County.  In the fourth quarter of 2001, this well commenced drilling.
The Company's share of the prospect fee and drilling costs for this new well
were approximately $36,000 during the fourth quarter of 2001.  The third well
was abandoned in the fourth quarter of 2001 due to inadequate gas reserves.
The costs for the third well, abandoned in the fourth quarter of 2001, are
recorded in Costs and Expenses on the Statements of Operations.  The Company
has not received any proposals to participate in a fifth well in this joint
venture.

During the second quarter of 2001, the Company entered into a new joint
venture project with several other independent oil and gas companies, to
explore for and develop potential oil reserves in the Gap Mountain area of
Nevada.  The Company's position is that of a non-operator.  During the second
quarter of 2001, the Company's share of the prospect fee for this project was
approximately $48,000.  During the fourth quarter of 2001, the Company
received a full and complete refund of the prospect fee.  This prospect was
cancelled by the operator after additional structural geology work and
analysis.  Approximately $42,000 recorded as Exploration Costs in the nine
months ended September 30, 2001 was reversed in the fourth quarter as the
Company was reimbursed for these costs due to the abandonment of an
exploration project.

The Company has entered into various employment agreements with key executive
employees.  In the event the key executives are dismissed, the Company would
incur approximately $508,000 in costs.




<PAGE> 40
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------


7.  Other Income
    ------------

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.



8.  Defined Contribution Plan
    -------------------------

The Company has a defined contribution plan (Simple IRA) available to all
employees meeting certain service requirements.  Employees may contribute up
to a maximum of $6,000 of their compensation to the plan.  The Company will
make a contribution to the plan in an amount equal to the employees
contributions up to 3% of their salaries.  Contributions of $10,324 and $6,357
were made during the years ended December 31, 2001 and 2000, respectively.

<PAGE>
<PAGE> 41
                                 PYRAMID OIL COMPANY
                          SUPPLEMENTAL INFORMATION (UNAUDITED)
                            OIL AND GAS PRODUCING ACTIVITIES
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------



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, 2001, 2000 and 1999
were as follows:

<Table>
<Caption>
                                      2001         2000         1999
                                   ----------   ----------   ----------
<S>                               <C>          <C>          <C>
Proved properties                 $10,115,000  $10,165,200  $10,189,100
Unproved properties
  being amortized                     178,600      178,600      178,600
Unproved properties
  not being amortized                      --           --           --
Accumulated depletion,
  depreciation, amortization
  and valuation allowances         (9,926,300)  (9,887,300)  (9,802,700)
                                    ---------    ---------    ---------
                                  $   367,300  $   456,500  $   565,000
                                    =========    =========    =========
</Table>
<PAGE>
<PAGE> 42
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------



The estimated quantities and the change in proved reserves, both developed and
undeveloped, for the Company are as follows:

<Table>
<Caption>
                                  2001            2000           1999
                              ------------   -------------  -------------
                               Oil     Gas      Oil    Gas     Oil    Gas
                             (MBbls) (MMCF)  (MBbls) (MMCF) (MBbls) (MMCF)
                              -----   ----    -----   ----   -----   ----
<S>                          <C>     <C>     <C>     <C>    <C>     <C>
Proved reserves:
  Beginning of year            341      72     361      65     384    127
  Revisions of previous
    estimates                   59     (26)     51      16      61    (38)
  Extensions, discoveries
    and other additions         --      --      --      --      --     --
  Production                   (77)    ( 9)    (71)    ( 9)    (84)   (24)
                              ----    ----    ----    ----    ----   ----
  End of year                  323      37     341      72     361     65
                              ====    ====    ====    ====    ====   ====
Proved developed reserves:
  Beginning of year            341      72     361      65     384    127
                              ====    ====    ====    ====    ====   ====
  End of year                  323      37     341      72     361     65
                              ====    ====    ====    ====    ====   ====
</Table>

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.








<PAGE> 43
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 DECEMBER 31, 2001
---------------------------------------------------------------------------

The present value of estimated future net revenues of proved developed
reserves, discounted at 10%, were as follows:

<Table>
<Caption>
                                            December 31,
                               --------------------------------------
                                  2001          2000          1999
                               ----------    ----------    ----------
<S>                            <C>           <C>           <C>
Proved developed reserves
  (Present value before
   income taxes)               $1,250,000    $2,311,000    $2,718,000
                                =========     =========     =========

</Table>

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,
2001, 2000 and 1999 were as follows:

<Table>
<Caption>
                                       2001          2000          1999
                                      -------       -------       -------
<S>                                  <C>           <C>           <C>
Property acquisition costs           $  7,000      $     --      $     --
Exploration costs                      44,000        35,000        28,000
Development costs                      12,000            --            --

</Table>








<PAGE> 44
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 DECEMBER 31, 2001
---------------------------------------------------------------------------

The results of operations for oil and gas producing activities for the years
ended December 31, 2001, 2000 and 1999 were as follows:

<Table>
<Caption>
                                     2001          2000          1999
                                  ----------    ----------    ----------
<S>                              <C>           <C>           <C>
Sales                            $ 1,680,000   $ 2,024,000   $ 1,309,000
Production costs                   1,107,000     1,031,000       800,600
Exploration costs                     44,000        35,000        28,000
Depletion, depreciation,
  and amortization                   102,000       109,000       170,200
                                   ---------     ---------     ---------
                                     427,000       849,000       310,200
Income tax (benefit) provision         1,200      ( 41,200)        1,200
                                   ---------     ---------     ---------
Results of operations from
  production activities          $   425,800   $   890,200   $   309,000
                                   =========     =========     =========

</Table>

The standardized measure of discounted estimated future net cash flows
relating to proved oil and gas reserves for the years ended December 31, 2001,
2000 and 1999 were as follows:

<Table>
<Caption>
                                     2001          2000          1999
                                  ----------    ----------    ----------
<S>                              <C>           <C>           <C>
Future cash inflows              $ 5,529,000   $ 7,407,000   $10,401,000
Future development and
  production costs                 3,538,000     3,848,000     6,906,000
Future income tax expense             12,000        12,000        12,000
                                  ----------    ----------    ----------
Future net cash flow               1,979,000     3,547,000     3,483,000
10% annual discount                  736,000     1,244,000       775,000
Standardized measure              ----------    ----------    ----------
  of discounted future
  net cash flow                  $ 1,243,000   $ 2,303,000   $ 2,708,000
                                  ==========    ==========    ==========
</Table>





<PAGE> 45
                                 PYRAMID OIL COMPANY
                         SUPPLEMENTAL INFORMATION (UNAUDITED)
                                  DECEMBER 31, 2001
-----------------------------------------------------------------------------



The principal changes in the standardized measure of discounted future net
cash flows during the years ended December 31, 2001, 2000 and 1999 were as
follows:

<Table>
<Caption>
                                         2001          2000          1999
                                      ----------    ----------    ----------
<S>                                 <C>           <C>           <C>
Extensions                           $        --   $        --   $        --
Revisions of previous estimates
 Price changes                          (871,000)      373,000     1,739,000
 Quantity estimate                       216,000       423,000       403,000
Change in production rates,
  timing and Other                      ( 63,000)     (480,000)     ( 17,000)
Development costs incurred                12,000            --            --
Changes in estimated future
  development costs                     ( 12,000)           --            --
Sales of oil and gas, net of
  production costs                      (573,000)     (993,000)     (508,000)
Accretion of discount                    231,000       272,000       100,000
                                      ----------    ----------    ----------
                                      (1,060,000)    ( 405,000)    1,717,000
Net change in income taxes                    --            --            --
                                      ----------    ----------    ----------
Net (decrease) increase              $(1,060,000)  $ ( 405,000)  $ 1,717,000
                                      ==========    ==========    ==========
</Table>

<PAGE>
<PAGE> 46
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                  DECEMBER 31, 2001
------------------------------------------------------------------------------



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 $1,060,000 in the Company's standardized measure of future net
cash flows for the year ended December 31, 2001 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 2001 reduced the discounted future net cash flows by
approximately $871,000.  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.
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.



<PAGE>
<PAGE> 47
                                PYRAMID OIL COMPANY
                         SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 QUARTERLY RESULTS
-----------------------------------------------------------------------------
<Table>
<Caption>
                                        2001         2000
                                    ----------    ----------
<S>                                 <C>           <C>
    REVENUES:

      Quarter Ended:

          March 31                  $   446,678   $   455,058
          June 30                       485,258       482,280
          September 30                  445,698       561,860
          December 31                   302,440       524,607
                                     ----------    ----------
                                    $ 1,680,074   $ 2,023,805
                                     ==========    ==========
    NET INCOME (LOSS):

      Quarter Ended:

          March 31                  $   446,382   $    84,803
          June 30                        84,209       101,072
          September 30                  105,772       236,063
          December 31 (a),(b)          (104,334)      104,924
                                     ----------    ----------
                                    $   532,029   $   526,862
                                     ==========    ==========
    INCOME (LOSS) PER COMMON SHARE:

      Quarter Ended:

          March 31                  $       .18   $       .03
          June 30                           .03           .04
          September 30                      .04           .09
          December 31 (a),(b)              (.04)          .05
                                     ----------    ----------
                                    $       .21   $       .21
                                     ==========    ==========
</Table>

(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.

(b)  Approximately $42,000 recorded as Exploration Costs in the nine months
ended September 30, 2001 was reversed in the fourth quarter as the Company was
reimbursed for these costs due to the abandonment of an exploration project.

<PAGE> 48


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 2002 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 2002
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 2002
Annual Meeting of Shareholders.










<PAGE> 49

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

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 $98,000 in 2001, $124,000 in 2000 and
$81,000 in 1999.









































<PAGE> 50

                                   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, 2001 and 2000.
            Statements of Operations for the three years in the period
              ended December 31, 2001.
            Statements of Shareholders' Equity for the three
              years in the period ended December 31, 2001.
            Statements of Cash Flows for the three
              years in the period ended December 31, 2001.
            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      Employment Agreement of J. Ben Hathaway, dated August 1,
                    2001.  (3)
        10.2      Employment Agreement of John H. Alexander, dated August 1,
                    2001.  (3)
        10.3      Employment Agreement of John H. Alexander, dated February
                    21, 2002.
        10.4      Employment Agreement of Benny Hathaway, Jr. dated February
                    21, 2002.
        99        Letter to Securities and Exchange Commission regarding
                    Arthur Andersen's representations.

(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 10.1 and 10.2 to the Registrants
         June 30, 2001 Form 10-QSB

(b) Reports on Form 8-K
    -------------------

      No reports on Form 8-K were filed during the fourth quarter of 2001.

<PAGE> 51

                                  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, 2002                         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, 2002
---------------------------
     J. Ben Hathaway


    JOHN H. ALEXANDER         Director/Vice President       March 28, 2002
---------------------------
    John H. Alexander


      THOMAS W. LADD          Director                      March 28, 2002
---------------------------
      Thomas W. Ladd

      GARY L. RONNING         Director                      March 28, 2002
---------------------------
      Gary L. Ronning

                              Director                      March 28, 2002
---------------------------
       John E. Turco


   LEE G. CHRISTIANSON       Corporate Secretary/           March 28, 2002
---------------------------  Principal Accounting Officer
   Lee G. Christianson