<PAGE> 1
                               UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                FORM 10-K


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 2010

                                    or

[ ]  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 001-32989


                             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:  (661) 325-1000

Securities registered pursuant to Section 12 (b) of the Exchange Act:

     Title of each class         Name of each exchange on which registered

        Common Stock                            NYSE AMEX


Securities registered pursuant to Section 12 (g) of the Exchange Act: NONE


Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes [ ] No [X]

  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 whether the registrant has submitted electronically
and posted on its corporate Website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or such shorter period that the registrant was
required to submit and post such files).  Yes [  ] No [   ]


<PAGE> 2

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ X ]

  Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.

        Large accelerated filer [ ]         Accelerated filer [ ]
        Non-accelerated filer [ ]           Smaller reporting company [x]

  Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).  Yes [ ] No [x]

  The aggregate market value on June 30, 2010, (the last business day of the
registrant's most recently completed second fiscal quarter) of the voting
shares held by non-affiliates was approximately $12,188,000 based on the
closing sales price of the registrant's Common Stock on such date.

  At March 30, 2011, there were 4,677,728 shares of Common Stock outstanding.


                     DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the registrant's definitive proxy statement for its 2011 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.












     
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                          PYRAMID OIL COMPANY
                    2010 FORM 10-K ANNUAL REPORT

                          Table of Contents

                                                                Page
                               PART I

Item  1.    Business   . .  . .  . .  . .  . .  . .  . .          4

Item 1A.    Risk Factors    . .  . .  . .  . .  . .  . .          7

Item 1B.    Unresolved Staff Comments   .  . .  . .  . .         12

Item  2.    Properties . .  . .  . . .  .  . .  . .  . .         12

Item  3.    Legal Proceedings .  . .  . .  . .  . .  . .         17

Item  4.    (Removed and Reserved) .  . .  . .  . .  . .         17

                               PART II

Item  5.    Market for Registrant's Common Equity, Related
              Stockholder Matters and Issuer
              Purchases of Equity Securities .  . .  . .         17

Item  6.    Selected Financial Data   . .  . .  . .  . .         18

Item  7.    Management's Discussion and Analysis of Financial
              Condition and Results of Operations                18

Item 7A.    Quantitative and Qualitative Disclosures
              About Market Risk   .  . .  . .  . .  . .          26

Item  8.    Financial Statements and Supplementary Data          27

Item  9.    Changes In and Disagreements with Accountants
              on Accounting and Financial Disclosure             58

Item  9A    Controls and Procedures  . .  .   . .  . . .         58

Item  9B.   Other Information . . . . . .  . .  . .  . .         59

                               PART III

Item 10.    Directors, Executive Officers, and
              Corporate Governance    . .  . .  . .  . .         59

Item 11.    Executive Compensation .  . .  . .  . .  . .         59


Item 12.    Security Ownership of Certain Beneficial
              Owners and Management and Related
              Stockholder Matters  .  . .  . .  . .  . .         59

Item 13.    Certain Relationships and Related Transactions,
              and Director Independence                          59

Item 14.    Principal Accounting Fees and Services   . .         60


                               PART IV

Item 15.    Exhibits and Financial Schedules  . .  . . .         60


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

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 the federal
securities laws.  Statements made in this Annual Report on Form 10-K 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 -  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 crude oil or natural
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 other companies 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, Wyoming and Texas, all of
the Company's operations and major revenue producing properties are in
California.

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

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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 under certain economic
conditions.

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.  Nine of these
properties were not operated during 2010.  All of these properties were
shut-down before 2010.  No other properties were shut-down during 2010.  Most
of these properties are capable of producing oil or natural gas, although not
all of these properties are considered profitable under certain economic
conditions.  There are no proved reserves attributed to these properties at
December 31, 2010.  All of the shut-in properties had been written-down in
prior periods.

During 2010, the Company operated 18 leases within California, 14 of these
leases had total annual gross oil production exceeding 1,000 barrels per
lease.  Production activities 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 flow; fluids and
gases are moved to the surface by natural pressure or by means of artificial
lift (pumping).  In secondary recovery operations, liquids or gases are
injected into the reservoirs for the purpose of augmenting reservoir energy or
increasing reservoir temperatures. Secondary recovery operations, usually, but
not always, are done after the primary-recovery phase has passed.

The Company employs field 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 various 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 122 wells, and of these, approximately 54 were in operation
during 2010.  The Company also owns other oil and gas interests outside of
California that it does not operate.  These interests are located in Wyoming,
Texas and New York.

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MARKETING OF CRUDE OIL AND NATURAL GAS

The Company sells its crude oil to ConocoPhillips and Kern Oil & Refining,
accounting for approximately 50% and 46%, respectively, of the Company's crude
oil and gas sales in 2010.  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.  ConocoPhillips, and
its predecessors, and Kern Oil have been customers of the Company for over
twenty 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.  The Company's crude oil sales are not seasonal,
but uniform throughout the year.


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.


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

<PAGE> 7

Company.  The Company does not currently 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.


COMMITMENTS AND CONTINGENCIES

The Company is liable for future dismantlement and abandonment costs
associated with its oil and gas properties.  These costs include down-hole
plugging and abandonment of wells, future site restoration, post closure and
other environmental exit costs.  The costs of future dismantlement and
abandonment have been accrued and recorded in the financial statements.  See
Note 10 of Notes to Financial Statements included in Item 8 of this Form
10-K.


OTHER

The Company employed twelve full-time and two part-time people as of
December 31, 2010.  Three full-time and two part-time people were office or
administrative personnel, and the rest of whom were field 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, 2010.

All of the Company's revenues during 2010 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 1A - RISK FACTORS

In addition to other information in this annual report, the following risk
factors should be carefully considered in evaluating the Company's business
because such factors may have a significant impact on the Company's business,
operating results, liquidity and financial condition. As a result of the risk
factors set forth below, actual results could differ materially from those
projected in any forward-looking statements. Additional risks and
uncertainties not presently known to us, or that we currently consider to be
immaterial, may also impact the Company's business, operating results,
liquidity and financial condition. If any such risks occur, the Company's
business, operating results, liquidity and financial condition could be
materially affected in an adverse manner. Under such circumstances, the
trading price of the Company's securities could decline, and you may lose all
or part of your investment in the Company.

   RISKS RELATING TO THE COMPANY'S BUSINESS AND THE OIL AND GAS INDUSTRY

THE COMPANY'S FUTURE PERFORMANCE IS DEPENDENT UPON THE COMPANY'S ABILITY TO
CONTINUE TO IDENTIFY, ACQUIRE AND DEVELOP ADDITIONAL OIL AND GAS PROPERTIES,
THE FAILURE OF WHICH COULD RESULT IN UNDER USE OF CAPITAL AND LOSSES.

The Company's future performance depends upon the Company's ability to
continue to identify, acquire and develop additional oil and gas reserves that
are economically recoverable. The Company's success will depend upon the
Company's ability to continue to acquire working and revenue interests in

<PAGE> 8

properties upon which oil and gas reserves are ultimately discovered in
commercial quantities, and the Company's ability to develop additional
prospects that contain proven oil and gas reserves to the point of production.
The successful acquisition and development of oil and gas properties requires
an assessment of recoverable reserves, future oil and gas prices and operating
costs, potential environmental and other liabilities, and other factors. Such
assessments are necessarily inexact and their accuracy inherently uncertain.
In addition, no assurance can be given that the Company's future exploitation
and development activities will result in the discovery of additional
reserves.

THE COMPANY HAS A VERY SMALL MANAGEMENT TEAM AND THE LOSS OF ANY MEMBER OF THE
COMPANY'S TEAM MAY PREVENT US FROM IMPLEMENTING THE COMPANY'S BUSINESS PLAN IN
A TIMELY MANNER.

The Company currently has two executive officers and a small number of full
time employees and consultants upon whom the Company's success largely
depends. We do not maintain key person life insurance policies on the
Company's executive officers or consultants, the loss of whom could seriously
harm the Company's business, financial condition and results of operations. In
such an event, we may not be able to recruit personnel to replace the
Company's executive officers or consultants in a timely manner, or at all, or
on acceptable terms.

THE OIL AND GAS INDUSTRY IS HIGHLY COMPETITIVE, AND THE COMPANY MAY NOT HAVE
SUFFICIENT RESOURCES TO COMPETE EFFECTIVELY.

The oil and gas industry is highly competitive. The Company competes with oil
and natural gas companies and other individual producers and operators, many
of which have substantially greater financial and other resources than the
Company. The Company's larger competitors, by reason of their size and
relative financial strength, can more easily access capital markets than the
Company can and may enjoy a competitive advantage in the recruitment of
qualified personnel. Competitors may be able to absorb the burden of any
changes in laws and regulations in the jurisdictions in which the Company does
business and handle longer periods of reduced prices for oil and gas more
easily than we can. The Company's competitors may be able to pay more for oil
and gas leases and properties and may be able to define, evaluate, bid for and
purchase a greater number of leases and properties than the Company can.
Further, these companies may enjoy technological advantages and may be able to
implement new technologies more rapidly than the Company can. The Company's
ability to acquire additional properties in the future will depend upon the
Company's ability to conduct efficient operations, evaluate and select
suitable properties, implement advanced technologies and consummate
transactions in a highly competitive environment.

THE COMPANY'S EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES ARE SUBJECT
TO CERTAIN ENVIRONMENTAL REGULATIONS WHICH MAY AFFECT THE COMPANY'S COSTS OF
OPERATIONS.

In general, the Company's exploration and production activities are subject to
certain federal, state and local laws and regulations relating to
environmental quality and pollution control. Such laws and regulations
increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Specifically, the Company is
subject to legislation regarding emissions into the environment, water
discharges and storage and disposition of hazardous wastes. However, such laws
and regulations are frequently changed and any such changes may have material
adverse effects on the Company's activities. The Company is unable to predict
the ultimate cost of compliance with such laws and regulations. Generally,
environmental requirements do not appear to affect the Company any differently
or to any greater or lesser extent than other companies in the industry. To
date the Company has not been required to spend any material amounts on
compliance with environmental regulations. However, the Company may be

<PAGE> 9

required to do so in future and this may affect the Company's ability to
expand or maintain the Company's operations.

ANY CHANGE TO GOVERNMENT REGULATION/ADMINISTRATIVE PRACTICES MAY HAVE A
NEGATIVE IMPACT ON THE COMPANY'S ABILITY TO OPERATE AND THE COMPANY'S
PROFITABILITY.

The business of oil and gas exploration and development is subject to
substantial regulation under federal, state, local and foreign laws relating
to the exploration for, and the development, upgrading, marketing, pricing,
taxation, and transportation of oil and gas and related products and other
matters. Amendments to current laws and regulations governing operations and
activities of oil and gas exploration and development operations could have a
material adverse impact on the Company's business. In addition, there can be
no assurance that income tax laws, royalty regulations and government
incentive programs related to the Company's oil and gas properties and the oil
and gas industry generally, will not be changed in a manner which may
adversely affect the Company's progress and cause delays, inability to explore
and develop or abandonment of these interests.

Permits, leases, licenses, and approvals are required from a variety of
regulatory authorities at various stages of exploration and development. There
can be no assurance that the various government permits, leases, licenses and
approvals sought will be granted in respect of the Company's activities or, if
granted, will not be cancelled or will be renewed upon expiry. There is no
assurance that such permits, leases, licenses, and approvals will not contain
terms and provisions which may adversely affect the Company's exploration and
development activities.

THE COMPANY IS REQUIRED TO REPLACE, MAINTAIN OR EXPAND THE COMPANY'S OIL AND
GAS RESERVES IN ORDER TO PREVENT THE COMPANY'S FUTURE RESERVES AND PRODUCTION
FROM DECLINING, WHICH WOULD ADVERSELY AFFECT FUTURE CASH FLOWS AND INCOME.

In general, production from oil and gas properties declines over time as
reserves are depleted, with the rate of decline depending on reservoir
characteristics. The Company's future oil and gas production is highly
dependent upon the Company's ability to economically find, develop, acquire
and maintain reserves in commercial quantities.

To the extent cash flow from operations is reduced, either by a decrease in
prevailing prices for oil and gas or an increase in finding and development
costs, and external sources of capital become limited or unavailable, the
Company's ability to make the necessary capital investment to maintain or
expand the Company's asset base of oil and gas reserves would be impaired.
Even with sufficient available capital, the Company's future exploration and
development activities may not result in additional proved reserves, and we
might not be able to drill productive wells at acceptable costs.

THE OIL AND GAS EXPLORATION AND PRODUCTION INDUSTRY IS HISTORICALLY A CYCLICAL
INDUSTRY AND MARKET FLUCTUATIONS IN THE PRICES OF OIL AND GAS COULD ADVERSELY
AFFECT THE COMPANY'S BUSINESS.

Prices for oil and gas tend to fluctuate significantly in response to factors
beyond the Company's control. These factors include:

     -  weather conditions in the United States and where the Company's
property interests are located;

     -  economic conditions, including demand for petroleum-based products, in
the United States and the rest of the world;

     -  actions by OPEC, the Organization of Petroleum Exporting Countries;
political instability in the Middle East and other major oil and gas producing
regions;

<PAGE> 10

     -  governmental regulations;

     -  domestic tax policy;

     -  the price of foreign imports of oil and gas;

     -  the cost of exploring for, producing and delivering oil and gas;

     -  the discovery rate of new oil and gas reserves;

     -  the rate of decline of existing and new oil and gas reserves;

     -  available pipeline and other oil and gas transportation capacity;

     -  the ability of oil and gas companies to raise capital;

     -  the overall supply and demand for oil and gas; and

     -  the availability of alternate fuel sources.

Changes in commodity prices may significantly affect the Company's capital
resources, liquidity and expected operating results. Price changes will
directly affect revenues and can indirectly impact expected production by
changing the amount of funds available to reinvest in exploration and
development activities. Reductions in oil and gas prices not only reduce
revenues and profits, but could also reduce the quantities of reserves that
are commercially recoverable. Significant declines in prices could result in
non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect the Company's
ability to estimate the value of producing properties for acquisition and
divestiture and often cause disruption in the market for oil and gas producing
properties, as buyers and sellers have difficulty agreeing on the value of the
properties. Price volatility also makes it difficult to budget for and project
the return on acquisitions and the development and exploitation of projects.
We expect that commodity prices will continue to fluctuate significantly in
the future.

EXPLORATORY AND DEVELOPMENTAL DRILLING AND PRODUCTION OPERATIONS INVOLVES MANY
RISKS THAT ARE OUTSIDE THE COMPANY'S CONTROL AND WHICH MAY RESULT IN A
MATERIAL ADVERSE EFFECT ON THE COMPANY'S BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.

The business of exploring for, developing and producing oil and gas involves a
substantial risk of investment loss. Drilling and operating oil and gas wells
involves the risk that the wells may be unproductive or that, although
productive, the wells may not produce oil or gas in economic quantities. Other
hazards, such as unusual or unexpected geological formations, pressures,
fires, blowouts, power outages, gas leakage, loss of circulation of drilling
fluids or other conditions may substantially delay or prevent completion of
any well. Adverse weather conditions can also hinder drilling operations. A
productive well may become uneconomic if water or other deleterious substances
are encountered that impair or prevent the production of oil or gas from the
well. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. There can be no
assurance that oil and gas will be economically produced from all properties
in which the Company has interests.

AT TIMES THE COMPANY PARTICIPATES IN JOINT VENTURES WHEREIN THE COMPANY IS
DEPENDANT UPON THE EFFORTS OF VARIOUS THIRD PARTIES THAT THE COMPANY DOES NOT
CONTROL AND, AS A RESULT, THE COMPANY MAY NOT BE ABLE TO CONTROL THE TIMING OF
DEVELOPMENT EFFORTS, ASSOCIATED COSTS, OR THE RATE OF PRODUCTION OF RESERVES
(IF ANY).


<PAGE> 11

The success of the Company's business interests in certain joint ventures,
where the Company owns less than a majority interest depends upon the efforts
of various third parties that the Company does not control. As a result, the
Company may have limited ability to exercise influence over certain joint
venture decisions, operations or costs in certain joint venture activities.
The Company's dependence on the operator and, where applicable, other working
interest owners for these projects and the Company's limited ability to
influence operations and associated costs could prevent the Company from
realizing targeted returns on capital in drilling or acquisition activities.
The success and timing of development and exploitation activities on joint
venture properties operated by others depend upon a number of factors that
will be largely outside of the Company's control, including:

     -  the timing and amount of capital expenditures;

     -  the operator's expertise and financial resources;

     -  approval of other participants in drilling wells;

     -  selection of technology;

     -  the rate of production of the reserves; and

     -  the availability of suitable drilling rigs, drilling equipment,
production and transportation infrastructure, and qualified operating
personnel.

The Company relies upon various consultants and service companies to provide
us with technical assistance and services. The Company relies upon the
services of geologists, geophysicists, chemists, engineers and other
scientists to explore and analyze oil and gas prospects to determine a method
in which the oil and gas prospects may be developed in a cost-effective
manner. Although the Company's management has relationships with a number of
third-party service providers, we cannot assure you that we will be able to
continue to rely on such consultants or services in the future.


               RISKS RELATED TO THE COMPANY'S COMMON STOCK

THE VALUE OF THE COMPANY'S COMMON STOCK MAY BE ADVERSELY
AFFECTED BY MARKET VOLATILITY

The trading price of the Company's common stock fluctuates and may be
influenced by many factors, including:

     -  The Company's operating and financial performance and prospects;

     -  The depth and liquidity of the market for the Company's common stock;

     -  Investor perception of the Company and the industry and markets in
        which the Company operates;

     -  The Company's inclusion in, or removal from, any equity market
        indices;

     -  Changes in earnings estimates or buy/sell recommendations by analysts;
        and

     -  General financial, domestic, international, economic and other market
        conditions.





<PAGE> 12

THE COMPANY'S ABILITY TO RAISE CAPITAL IN THE FUTURE MAY BE LIMITED, AND THE
COMPANY'S FAILURE TO RAISE CAPITAL WHEN NEEDED COULD PREVENT THE COMPANY FROM
EXECUTING ITS GROWTH STRATEGY

The timing and amount of the Company's working capital and capital expenditure
requirements may vary significantly depending on many factors, including
future oil and gas prices and the amount of the Company's future oil and gas
production.

If the Company's capital resources are not sufficient to satisfy its liquidity
needs, the Company may seek to sell additional equity or obtain additional
debt financing.  The sale of additional equity would result in dilution to the
Company's shareholders.  Additional debt would result in increased expenses
and could result in covenants that would restrict the Company's operations.
In addition, the Company may not be able to obtain additional financing, if
required, in amounts on or terms acceptable to the Company, or at all.

THE COMPANY'S BY-LAWS DO NOT CONTAIN ANTI-TAKEOVER PROVISIONS AND THUS THE
COMPANY'S MANAGEMENT AND DIRECTORS MAY CHANGE IF THERE IS A TAKE-OVER OF THE
COMPANY.

We do not currently have a shareholder rights plan or any anti-takeover
provisions in the Company's by-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of the Company. If there is a take-over
of the Company, the Company's management and directors may change.


ITEM 1B - UNRESOLVED STAFF COMMENTS

        None

ITEM 2 - PROPERTIES

(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,
Texas and New York.

The general business description and the description of the Company's oil and
natural gas operations are described on page 4 under Item 1. Business.
Information required by Subpart 1200 of Regulation S-K (Disclosure by
Registrants Engaged in Oil and Gas Producing Activities) is also contained in
Item 1. and in Item 8. Financial Statements and Supplementary Data,
Supplemental Information - Oil and Gas Producing Activities is on pages 51 to
56.  The preceding information is incorporated by reference into this Item 2.

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 proved undeveloped reserves
of 77,700, 96,000 and 9,500 at December 31, 2010, 2009 and 2008, respectively.
The Company had no significant proved undeveloped properties at December 31,
2007, and 2006.

The Company had proved undeveloped reserves of 77,700 barrels of crude oil at
December 31, 2010.  These reserves are attributable to three wells that the
Company plans to drill in 2011.  The Company projected that it would cost
approximately $1,596,000 to drill and complete these wells in 2011.  One of
these wells the Pike 1-H, a horizontal well, was spudded in March of 2011.
The Company is drilling this well in conjunction with a joint-venture partner.
The Company is the operator of the joint venture.

<PAGE> 13

The Company had proved undeveloped reserves of 96,000 barrels of crude oil at
December 31, 2009.  These reserves are attributable to three wells that the
Company planned to drill in 2010.  The Company projected that it would cost
approximately $1,550,000 to drill and complete these wells in 2010.  Two of
these wells were drilled in 2010.  The Anderson No. 10 well was drilled in the
first quarter of 2010 at a cost of $481,000.  This well was completed and
placed into production in the first quarter of 2010 and is currently under
production.  The second well was drilled in the second quarter of 2010.  The
CLI No. 4-H, was not completed due to the absence of hydrocarbons and was
abandoned as a dry-hole.  The cost to drill this well was $867,000.  A
valuation allowance of $867,000 was recorded in the first and second quarter
against the costs of this well.

The Company had proved undeveloped reserves of 9,500 barrels of gas (which
represents the crude oil equivalent of 57,000 MCF's, 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) at December 31, 2008.
This represents the reserves attributable to a well that was drilled in 2008
on the properties of the Texas natural gas joint venture.  Additional work
costing approximately $86,000 was expended to develop these reserves in 2009.
The results of this effort in 2009 did not generate the anticipated results.
A valuation allowance has been recorded against the full capitalized costs of
this well.

The Company had proved undeveloped reserves of 79,600 barrels of crude oil at
December 31, 2007.  These reserves are attributable to two wells that the
Company planned to drill in 2008.  The Company drilled one of these wells, a
development well, in 2008 on the Santa Fe lease.  This well was completed and
placed on production in 2008.  The production results from this well were non-
economic and the well was shut-in during 2008.  The costs to drill and
complete this well were approximately $645,000. A valuation allowance was
recorded in 2008 against the costs of this well.  The other well that was
forecast to be drilled in 2008 was not drilled.  The Company reduced its
capital budget in 2008 due to lower crude oil sales prices that were
experienced during 2008.  The reserves for this well were not carried forward
into 2009 reserves.

The Company has no material amounts of proved undeveloped reserves that have
remained undeveloped for five years or more after disclosure as proved
undeveloped reserves.

(b)  OIL AND GAS PROPERTIES

The Company's estimated future net recoverable oil and gas reserves from
proved reserves, both developed and undeveloped properties, were assembled by
MHA Petroleum Consultants, independent petroleum engineers, and are as
follows:

<Table>
<Caption>
                                  Crude Oil          Natural Gas
                                    (BBLS)              (MCF)
                                  ---------          -----------
<S>                               <C>                <C>
   December 31, 2010               538,000              44,000
                2009               506,000              81,000
                2008               471,000             155,000
                2007               806,000             331,000
                2006               741,000              65,000
</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, 2010.

<PAGE> 14

Using the 12 month average of the first-of-the-month oil and gas prices and
year-end lease operating expenses, the estimated value of future net revenues
before income taxes to be derived from Pyramid's proved developed oil and gas
reserves, discounted at 10%, were $13,068,000 at December 31, 2010, $9,158,000
at December 31, 2009, $4,106,000 at December 31, 2008, $27,414,000 at
December 31, 2007, and $12,358,000 at December 31, 2006.

Pyramid participates in the drilling of developmental wells, no single one of
which would cause a significant change in the net reserve figure.

In December 2008, the SEC issued its final rule, Modernization of Oil and Gas
Reporting, which is effective for reporting 2009 reserve information.  In
January 2010, the FASB issued its authoritative guidance on extractive
activities for oil and gas to align its requirements with the SEC's final
rule.  We adopted the guidance as of December 31, 2009 in conjunction with our
year-end reserve report as a change in accounting principle.  Under the SEC's
final rule, prior period reserves were not restated.


   INTERNAL CONTROLS OVER RESERVE ESTIMATION

Our proved reserve information as of December 31, 2010 included in this Annual
Report on Form 10-K was estimated by our independent petroleum consultant, MHA
Petroleum Consultants, LLC, in accordance with generally accepted petroleum
engineering and evaluation principles and definitions and guidelines
established by the SEC.  For the company's estimation procedures, credentials
and statement of independence, see the MHA Petroleum Consultants, LLC, report
filed herein on Exhibit 99.1.  The technical persons responsible for preparing
the reserves estimates presented herein meet the requirements regarding
qualifications, independence, objectivity and confidentiality set forth in the
Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve
Information promulgated by the Society of Petroleum Engineers.  MHA Petroleum
Consultants, LLC, and their predecessors have been preparing the Company's
reserve information for over twenty years and thus, are very familiar with the
Company's operations and their oil and gas properties.

John H. Alexander, President and Lee Christianson, CFO, provide company data
(such as well ownership interests, oil and gas prices, production volumes and
well operating costs) to MHA Petroleum Consultants, LLC, and are the primary
Company employees responsible for reviewing MHA Petroleum Consultants, LLC,
use of our data and MHA Petroleum Consultants, LLC, estimation of our
reserves.  Mr. Alexander and an employee who is a petroleum engineer provide
MHA Petroleum Consultants, LLC, with technical data (such as well logs,
geological information and well histories).  Mr. Alexander and Mr.
Christianson have been with the Company for over twenty years.  Mr. Alexander
has over forty years experience in the oil and gas exploration and production
industry.

John Alexander and Lee Christianson review the preliminary MHA Petroleum
Consultants, LLC, reserve estimates and the financial inputs in the estimates.
Mr. Christianson, CFO, calculates the disclosed changes in reserve estimates
and the disclosed changes in the Standardized Measure relating to proved oil
and gas reserves.  Mr. Christianson has over thirty years experience in oil
and gas accounting.

Our company codes of business conduct and ethics are general internal controls
for preventing and detecting errors or fraud by our employees responsible for
the reserve estimation procedures and disclosure in our filings with the SEC.







<PAGE> 15

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>
                       2010      2009      2008       2007       2006
                       ----      ----      ----       ----       ----
<S>                  <C>       <C>       <C>         <C>       <C>
Crude oil (Bbls)      60,000    57,000    65,000     67,000     66,000

Natural gas (MCF)      9,000     5,000     5,000      5,000      7,000

</Table>

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>
                       2010       2009      2008      2007       2006
                       ----       ----      ----      ----       ----
<S>                   <C>        <C>       <C>       <C>        <C>
Sales price:
  Crude oil           $77.10     $57.16    $93.47    $67.83     $58.88
                       =====      =====     =====     =====      =====
  Natural gas         $ 4.37     $ 4.02    $ 7.94    $ 7.16     $ 7.28
                       =====      =====     =====     =====      =====

Production costs      $26.60     $24.20    $27.20    $24.00     $22.80
                       =====      =====     =====     =====      =====
</Table>

The average selling price of the Company's crude oil at December 31, 2010, was
approximately $88.72 per barrel and the average selling price of the Company's
natural gas at December 31, 2010, was approximately $4.22 per MCF.

As of December 31, 2010, 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>
    Oil              127       126               9,141     1,762
    Natural Gas       22         7              12,246     4,082
                     ---       ---              ------     -----
                     149       133              21,387     5,844
                     ===       ===              ======     =====
</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> 16

The Company drilled two new wells in 2010, the Anderson No.10 well and the CLI
No. 4-H.  The Anderson No. 10 well was drilled in the first quarter of 2010
and completed as a producing well.  The CLI No. 4-H was drilled in the second
quarter of 2010 and was abandoned as a dry-hole.  The Company recorded a
valuation allowance of $867,468 during the second quarter of 2010 to offset
the costs of drilling and abandoning this well.  The Company also redrilled
two existing wells during the fourth quarter of 2010, the Wilson No.3 and the
Alexander/Abadie No. 1.  Both of these wells are currently under production.
These wells had previously been shut-in for a number of years.  At December
31, 2010, the Company recorded a valuation allowance of $237,647 against the
costs of redrilling the Alexander/Abadie No. 1 well.  The Company also
recorded a valuation allowance of $117,412 at December 31, 2010 for one of its
Texas joint venture wells.

The Company drilled one well in 2008 on the Santa Fe lease.  This well was
completed and placed on production during 2008.  After this well was placed on
production, it was determined that it was not economic to produce and the well
is currently shut-in.  The Company also participated as a non-operator, along
with a group of partners, in the drilling of two natural gas wells in Texas,
one each in 2008 and 2009.  The gas well that was drilled in 2008 was placed
into production.  The gas well that was drilled in 2009 was not placed into
production until the first quarter of 2010.

The Company drilled two wells in 2007 on the Anderson lease.  Both of these
wells are currently in production and deemed economic.  The Company drilled
four new wells in 2006, two on the Santa Fe lease, one on the Anderson lease
and one joint-venture exploratory well.  The well on the Anderson lease and
one of the wells on the Santa Fe lease are producing wells.  The other well on
the Santa Fe lease was completed and placed into production. It was determined
to be un-economic and is shut-in.  The Company participated with one other oil
company as the operator in the drilling of the joint venture well in 2006.
This well was a dry-hole and was abandoned in 2006.

         "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, 2010, 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

   Texas

        McMullen County                               5,700         563
        Menard County                                   877         263

</Table>





<PAGE> 17

(c)  REAL PROPERTY OWNED

Pyramid owned the following real property as of December 31, 2010, all located
in California.

    County of Kern
         Mullaney yard                         20 acres
         Miller property                      112 acres
         Ranton property                       80 acres
         City of Bakersfield                    3 lots

Located on the three lots of real property in the city of Bakersfield is the
Company's executive offices.  This property was acquired by the Company in
1986.  The office building located on this property is a one story structure
with approximately 4,200 square feet in good condition.


ITEM 3 - LEGAL PROCEEDINGS

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.  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 - (REMOVED AND RESERVED)



                                  PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS
           AND ISSUER PURCHASES OF EQUITY SECURITIES

The common stock of Pyramid is traded on the NYSE Amex under the symbol "PDO".
The following are high and low sales prices for each quarter of 2010 and 2009,
and reflect inter-dealer prices without retail markup, markdown or commission.

<Table>
<Caption>
                                        High         Low
                                        ----        -----
<S>                                    <C>         <C>
    Fiscal Quarter Ending 2010

         March 31,                   $ 5.5300      $4.0000
         June 30,                      7.7000       3.7400
         September 30,                 5.2500       4.3400
         December 31,                  5.6800       4.2700

    Fiscal Quarter Ending 2009

         March 31,                     6.3100       2.8000
         June 30,                      9.5000       3.4718
         September 30,                 6.1600       4.2000
         December 31,                  6.3900       4.3500
</Table>

At December 31, 2010, the Company had 232 shareholders of record, and an
unknown number of additional holders whose stock is held in "street name".



<PAGE> 18

The Company did not repurchase any securities during 2010, or issue any
securities during 2010 that were not registered under the Securities Act of
1933.

The Company did not declare or pay any cash dividends on its common stock
during the preceding two fiscal years and does not anticipate paying any cash
dividends in the foreseeable future.


ITEM 6 - SELECTED FINANCIAL DATA

The following selected financial data is not necessarily indicative of our
future financial position or results of future operations, and should be read
in conjunction with Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Financial Statements and Notes
thereto included in Item 8, Financial Statements and Supplementary Data of
this Annual Report on Form 10-K.

<Table>                                     Years Ended December 31,
<Caption>                             (In thousands except per share data)
                                    2010     2009     2008     2007     2006
                                    ----     ----     ----     ----     ----
<S>                                <C>      <C>      <C>      <C>     <C>
STATEMENT OF OPERATIONS DATA
  Total Revenue                    $4,836   $3,312   $6,611   $4,945   $3,958
  Income from Operations               53     (537)   1,094    1,767      923
  Net Income (Loss)                   246     (189)   1,514    1,495      949
  Net Income (Loss) per Share
    Basic and Diluted               $0.05   $(0.04)   $0.32    $0.32    $0.20
  Weighted Average Number of
    Shares Outstanding
    Basic and Diluted               4,678    4,678    4,678    4,678    4,678

BALANCE SHEET DATA
  Cash and Cash Equivalents        $1,536   $1,439   $1,794    $  618   $ 619
  Short-term Investments            3,059    3,344    2,789     1,479   1,451
  Total Assets                     10,630   10,142   10,277     8,460   6,696
  Notes Payable                        40       21       45        71      37
  Stockholders' Equity              8,742    8,373    8,352     6,604   5,109
  Total Liabilities and
    Stockholders' Equity           10,630   10,142   10,277     8,460   6,696

PER SHARE DATA
  Net Book Value per
    Common Share                    $1.87    $1.79     $1.79    $1.41   $1.09
  Common Shares Outstanding         4,678    4,678     4,678    4,678   4,678
</Table>



ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS


IMPACT OF CHANGING PRICES

Average prices increased by approximately $19.24 per equivalent crude oil and
gas barrel sold during 2010 as compared with average prices for 2009.  In 2010
there were 245 separate crude oil price changes, as compared with 247 price
changes in 2009.  The difference between the highest ($90.20) and lowest
($64.95) posted prices in 2010 was $25.25 per barrel.  By comparison, this
same differential in 2009 was $50.85 per barrel.



<PAGE> 19

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and short-term investments of $4,594,000 at December 31,
2010, for a net decrease of $189,000, when compared to December 31, 2009.
Short-term investments consist of certificates of deposit having original
maturities of three months or more.  During 2010, operating activities
generated cash of $1,728,000.  During 2010, cash was consumed by purchase of
short-term investments of $550,000, capital spending of $2,258,000 and
principal payments on the Company's long-term debt totaling $21,000.  During
2010, cash was provided by redemption of short-term investments of $680,000,
proceeds from the sale of fixed assets of $321,000 and proceeds from the
issuance of long term debt of $40,000.  The components of the changes in cash
for 2010 are described in the Statements of Cash Flows included in Item 8 of
this Form 10-K.  Adequate funds were available to carry out all necessary oil
and gas operations and to maintain its equipment.  A $500,000 line of credit,
unused at December 31, 2010, also provided additional liquidity during 2010.

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, 2010.  In addition to its current assets,
the Company also has a credit facility for $500,000 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, 2010, the amount of cash, cash equivalents, and short
     term investments was equal to $4,594,000 in the aggregate.

     As of December 31, 2010 the Company had approximately $5,665,000 in
     current assets, and only $626,000 of current liabilities.

     As of December 31, 2010, the Company had long-term debt of $27,000
     (net of current maturities).

The Company is not a party to any 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 in drilling
and exploration prospects and specific rework of existing properties to
enhance production and expansion of its sales of crude oil and natural gas in
California.  If necessary, Pyramid could sell certain nonessential assets to
raise capital for the benefit of these programs.

The Company drilled two new wells and re-drilled two existing wells in 2010.
The Company participated as a non-operator in the drilling of a natural gas
well in Texas during 2009.  The Company drilled two wells in the years ended
December 31, 2008 and 2007.  The Company drilled four wells in the year ended
December 31, 2006.  One of the wells drilled in 2006 was an exploratory well
which was abandoned due to non-economic production of crude oil.

The Company's proved developed producing crude oil reserves increased by
approximately 49,500 barrels at December 31, 2010.  The increase in crude oil
reserves is due primarily to revisions of previous estimates.  The increase in
reserves due to revisions of estimates is due primarily to higher net average
crude prices (after production taxes and operating expenses) for 2010.
Certain oil and gas properties projected recoverable reserves and net revenues

<PAGE> 20

increased due to the higher net average prices.

The Company's proved developed producing crude oil reserves decreased by
63,000 barrels at December 31, 2009.  The decrease is due primarily to
production of approximately 57,000 barrels of crude oil during 2009.  The
remaining decline of 6,000 barrels in the reserves is due to revisions of
previous estimates.  The Company did not drill any crude oil wells during
2009.

The Company's proved developed producing natural gas reserves decreased by
56,000 MCF's at December 31, 2009. The decrease is due primarily to revisions
of previous estimates.  The estimates of gas reserves for the Texas gas
prospect decreased by approximately 40,000 MCF's due to unfavorable production
results from a gas well that was drilled in 2008 by the Texas joint venture.

The Company's crude oil reserves for the year ended December 31, 2008
decreased due primarily to a decrease in crude oil sales prices.  Proved
developed producing crude oil reserves decreased by 213,000 barrels at
December 31, 2008.  The crude oil prices at the end of a given year are one of
the most significant factors used to determine the value of crude oil
reserves.  The average prices at December 31, 2008 declined by approximately
$53.00 per barrel compared with the average prices at December 31, 2007.
Based on these prices, many of the Company's leases were uneconomic and no
reserves were attributed to these leases.

The Company's crude oil reserves for the year ended December 31, 2007
increased due primarily to revision of previous estimates.  The drilling of
two new wells in 2007 and higher average crude oil prices at December 31,
2007, combined to generate higher year-end reserves of proved developed
producing properties.  Proved developed producing crude oil reserves increased
by 120,600 barrels at December 31, 2007.

The Company's gas reserves increased by approximately 267,000 MCF's for the
year ended December 31, 2007.  The increase is due to the Company's investment
in a joint venture gas prospect in Texas.

The Company's crude oil reserves for the year ended December 31, 2006
increased due primarily to the drilling of four wells in 2006.

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 2011, crude oil prices have increased by approximately
$24.20 per barrel as of March 28, 2011, compared to prices at December
31, 2010.  There have been 58 separate price changes since December 31, 2010.






<PAGE> 21

In late February 2011, the Company began operations on its initial joint
venture horizontal well in Taft, California.  The Company is partnered with
Victory Oil Company, which owns the land adjacent to Pyramid's.  The well was
drilled to a depth of approximately 3,600 feet, with a 917-foot lateral
crossing both companies' properties.  Based on the lateral intervals open to
production, the ownership split of this well is expected to be 68% to the
Company and 32% to Victory.  A pumping unit is currently being moved on site
and the well will begin commercial production shortly thereafter.  Flow rates
for the well will be announced following production testing, which is expected
sometime in April.

On March 21, 2011, drilling operations were commenced on Pyramid's joint
venture prospect located in Menard County, Texas.  Log analysis of this well
indicated that the well would not be commercially viable, and was plugged and
abandoned.  The Company owns a 30% interest in the joint venture.

Pyramid is currently evaluating the feasability of drilling a new well and re-
entering a previously drilled well on its Kern County, California properties
during the second quarter of 2011.  Actual timing of these projects will be
dependent on drilling rig availability.

The Company continues to seek and evaluate opportunities within the energy
sector, to enhance the value of the Company.  The Company's growth in 2011
will be highly dependant on the amount of success the Company has in its
operations and capital investments, including the outcome of wells that have
not yet been drilled.  The Company's capital investment program may be
modified during the year due to exploration and development successes or
failures, market conditions and other variables.  The production and sales of
oil and gas involves many complex processes that are subject to numerous
uncertainties, including reservoir risk, mechanical failures, human error and
market conditions.

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.  The drilling of a new well and
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 2011, by drilling new wells and 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 2010.  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> 22


ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS


RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
  COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 2009


REVENUES

  Oil and Gas Sales

The increase in revenues of $1,203,316 is due primarily to higher average
prices combined with higher crude oil production for 2010.  The average price
of the Company's oil and gas for 2010 increased by $19.24 per equivalent
barrel when compared to the same period for 2009.  Crude oil production/sales
increased by approximately 1,000 barrels for 2010.


  Gain on Sale of Fixed Assets

On July 28, 2010, the Company entered into a Purchase and Sale Agreement for
the sale of a portion of its Texas joint venture leaseholds.  Pursuant to the
agreement, the Company agreed to sell to the buyers 5% of the working interest
of the Company's Texas joint venture, subject to certain prior agreements and
encumbrances.  The purchase price for the assigned interest is $320,566.
After the sale, the Company continues to own a 7.5% working interest in the
assets.  The Company recognized a gain on the sale of the Texas leasehold
interests in the amount of $320,566.  The leasehold interests had been
previously fully amortized.


OPERATING EXPENSES

Operating expenses increased by $165,171 for 2010 when compared to the same
period for 2009.  During 2010, the cost to produce an equivalent barrel of
crude oil was $26.56 per barrel, an increase of $2.35 per barrel when compared
with production costs for the same period of 2009.  The increase in lease
operating expenses is caused by many factors.  These include higher costs for
parts and supplies, contract operations, waste water disposal, equipment
rental, chemicals, equipment fuel and production equipment repair and
maintenance.

Parts and supplies increased by $73,146 due to an increase in lease and well
maintenance activities during 2010.  Contract operations increased by $31,743
due primarily to increased activity on the Texas gas prospect.  Waste water
disposal increased by $26,770 due to higher costs at the Company's Delaney
Tunnell lease.  Equipment rental increased by $25,063 due primarily to
maintenance activities on the Company's Mullaney lease and the rental of a
crude oil storage tanks for a new well that was drilled on the Anderson lease
and the redrill of the Wilson No. 3 well.   The cost of chemicals increased by
$21,896 due to increased usage of chemicals.  Equipment fuel increased by
$14,452 due to an increase in lease and well maintenance activities and higher
per unit costs of fuel. Production equipment repair and maintenance increased
by $14,305 due to an increase in maintenance activities.










<PAGE> 23


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses decreased by $49,779 for 2010 when
compared with the same period of 2009.  Accounting services decreased by
$77,276 due primarily to lower audit fees.  Officers salaries decreased by
$25,000.  During June of 2009, the Board of Directors approved the payment of
a bonus of $25,000 to Mr. Alexander, President.  No bonuses were paid during
2010.  These were offset by higher costs for administrative salaries,
consulting services, directors and officers liability insurance and computer
supplies and services.

Administrative salaries increased by $24,064 due to the hiring of a part-time
employee effective August 1, 2009.  Consulting services increased by $13,886
due to fees paid to a third-party geologist that is reviewing the Company's
oil and gas properties for potential well drilling locations.  Directors and
officers liability insurance premiums increased by $7,838.  Computer supplies
and services increased by $6,337.


PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION

The provision for depletion, depreciation and amortization increased by
$63,356 for 2010 when compared with the same period for 2009.  The increase is
due primarily to an increase in depletion of the Company's oil and gas
properties.  The per barrel depletion rates for 2010 are higher than the
comparable rates for 2009.  During the fourth quarter of 2010, the Company
recorded additional depletion expense of $27,010 due primarily to a decline in
reserves on two of the Company's oil and gas properties.


VALUATION ALLOWANCES

During the second quarter of 2010, the Company commenced the drilling of a
horizontal well on one of its Mountain View properties in Kern County,
California.  The well was drilled to its objective but did not encounter
adequate hydrocarbons to warrant completion of the well. The Company recorded
a valuation allowance of $867,468 for the costs that had been incurred for the
drilling of this well.  During the fourth quarter of 2010, the Company
recorded a valuation allowance of $355,059 against two oil and gas
properties.  On one of the properties, a well was redrilled in the fourth
quarter of 2010 and the projected future reserves were not sufficient to
support the costs incurred in the redrilling of this well. The Company also
recorded a valuation allowance for one of its Texas gas prospect wells.



ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS


RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
  COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 2008


REVENUES

OIL AND GAS SALES

The decrease in revenues of $3,298,733 is due primarily to lower average
prices combined with lower crude oil production/sales for 2009.  Oil and gas
sales decreased by 50% for the year ended December 31, 2009, when compared



<PAGE> 24

with the same period for 2008.  The average price of the Company's oil and gas
decreased by approximately $36.40 per equivalent barrel for 2009 when compared
to 2008.  Crude oil production/sales decreased by approximately 12,600
barrels.  The decrease in crude oil production is primarily the result
of the decline in production on the Company's Anderson and Santa Fe leases.


OPERATING EXPENSES

Operating expenses decreased by $530,167 for the year ended December 31, 2009,
when compared with the same period for 2008.  Operating expenses decreased by
27% for the year ended December 31, 2009.  The cost to produce an equivalent
barrel of crude oil during 2009 was approximately $24.21 per barrel, a
decrease of approximately $3.03 per barrel when compared with production costs
for 2008.  The decrease in lease operating expenses is caused by many factors.
These include lower costs for labor, parts and supplies, pump repairs,
equipment rental and equipment fuel.  The Company has reduced its maintenance
activities as a result of the lower crude oil sales prices.

Company labor as a component of total operating expenses decreased by
approximately 8% due to a reduction in overtime hours worked, a reduction in
hourly labor rates, a reduction in personnel and a reduction in bonuses paid.
Parts and supplies as a component of total operating expenses decreased by
approximately 6% due to a reduction in maintenance activities.  Pump repairs
as a component of total operating expenses were lower by approximately 3% due
to the decline in maintenance work during 2009 and the replacement of
down-hole pumps in prior years with more expensive pumps that are more
efficient and have better longevity.  Equipment rental costs as a component of
total operating expenses were lower by approximately 3% during 2009 due to the
discontinuance of the rental of crude oil storage tanks for the Santa Fe and
Anderson leases.  Equipment fuel as a component of total operating expenses
was lower by approximately 3% due to lower overall maintenance activities and
lower prices for gasoline and diesel during 2009.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses decreased by $77,114 for the year ended
December 31, 2009 when compared with the same period of 2008.  Accounting
services decreased by approximately $54,400 due primarily to lower costs
incurred for SOX-404 internal control compliance and tax related matters.


PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION

The provision for depletion, depreciation and amortization decreased by
$304,430 for the twelve months ended December 31, 2009, when compared with the
same period for 2008.  The decrease is due primarily to a decrease in
depletion of the Company's oil and gas properties in the amount of $318,202.
The decrease in depletion is due to a decrease in crude oil production for
2009 and a decrease in the depletable base due to the write-down of certain
oil and properties in 2008.













<PAGE> 25

CRITICAL ACCOUNTING POLICIES

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 FASB ASC
Topic No. 932.

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 FASB ASC Topic No. 360-10-15, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
(the Statement).  The Statement specifies when an impairment loss should be
recognized and how impairment losses should be measured for long-lived assets
to be held and used and for long-lived assets to be disposed of.  In
accordance with the Statement, the costs of proved oil and gas properties and
equipment are periodically assessed on a lease by lease basis to determine if
such costs exceed undiscounted future cash flows, and if conditions warrant an
impairment reserve will be provided based on the estimated future discounted
cash flows. The Company recorded an impairment reserve of $1,222,527, $358,757
and $1,162,379 at December 31, 2010, 2009 and 2008, respectively (see Note 6
of Notes to Financial Statements included in Item 8 of this Form 10-K).  The
accumulated impairment reserve was $3,991,960 and $2,769,430 at December 31,
2010 and 2009, respectively.


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 2010, 2009 and 2008
were $29.89, $14.97 and $27.86, 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.



<PAGE> 26

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued Accounting Standards Update 2010-06, Fair
Value Measurements and Disclosures (Topic 820): Improving Disclosures about
Fair Value Measurements.  This guidance amends the disclosure requirements
related to recurring and nonrecurring fair value measurements and requires new
disclosures on the transfers of assets and liabilities between Level 1 (quoted
prices in active market for identical assets or liabilities) and Level 2
(significant other observable inputs) of the fair value measurement hierarchy,
including the reasons and the timing of the transfers.  Additionally, the
guidance requires a roll forward of activities on purchases, sales, issuance
and settlements of the assets and liabilities measured using significant
unobservable inputs (Level 3 fair value measurements).  The guidance became
effective for the reporting period beginning January 1, 2010, except for the
disclosure on the roll forward activities for Level 3 fair value measurements,
which will become effective for the reporting period beginning January 1,
2011.  Other than requiring additional disclosures, adoption of this new
guidance has not and is not expected to have a significant impact on our
consolidated financial statements.  The Company's adoption of this updated
guidance was not significant to our consolidated financial statements.

In February 2010, the FASB issued updated guidance related to subsequent
events. As a result of this updated guidance, public filers must still
evaluate subsequent events through the issuance date of their financial
statements, however, they are not required to disclose the date in which
subsequent events were evaluated in their financial statements disclosures.
This amended guidance became effective upon its issuance on February 24, 2010
at which time the Company adopted this updated guidance.


ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Not applicable.

<PAGE>
<PAGE> 27

ITEM 8- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                           PYRAMID OIL COMPANY

                      INDEX TO FINANCIAL STATEMENTS

                            DECEMBER 31, 2010

                                                                     Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . .   28


FINANCIAL STATEMENTS:

    Balance sheets - December 31, 2010 and 2009 . . . . . . . . . .   29-30
    Statements of operations - years ended
      December 31, 2010, 2009 and 2008  . . . . . . . . . . . . . .   31-32
    Statements of shareholders' equity - years ended
      December 31, 2010, 2009 and 2008  . . . . . . . . . . . . . .   33
    Statements of cash flows - years
      ended December 31, 2010, 2009 and 2008  . . . . . . . . . . .   34-35
    Notes to financial statements . . . . . . . . . . . . . . . . .   36


<PAGE>
<PAGE> 28


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders
Pyramid Oil Company
Bakersfield, California


We have audited the balance sheets of Pyramid Oil Company (the Company) as
of December 31, 2010 and 2009, and the related statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2010.  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 the standards of the Public Company
Accounting Oversight Board (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.  The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting.  Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting.  Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, 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 provided 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, 2010 and 2009, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2010, in
conformity with U.S. generally accepted accounting principles.


SINGERLEWAK LLP

Los Angeles, California
March 30, 2011




















<PAGE> 29
                             FINANCIAL STATEMENTS
                              PYRAMID OIL COMPANY
                                BALANCE SHEETS
                                    ASSETS

<Table>
<Caption>                                                December 31,
                                                  --------------------------
                                                     2010            2009
                                                  ----------    ------------
<S>                                              <C>             <C>
CURRENT ASSETS:
   Cash and cash equivalents                    $ 1,535,532       $ 1,438,825
   Short-term investments                         3,058,528         3,344,061
   Trade accounts receivable
     (net of reserve for doubtful accounts
      of $4,000 in 2010 and 2009)                   508,457           375,954
   Income taxes receivable                               --           124,281
   Crude oil inventory                               86,361            62,760
   Prepaid expenses and other assets                230,876           169,595
   Deferred income taxes                            245,100           196,200
                                                  ---------        ----------
         Total current assets                     5,664,854         5,711,676
                                                  ---------        ----------
PROPERTY AND EQUIPMENT, at cost:
   Oil and gas properties and equipment
     (successful efforts method)                 18,101,529        16,085,228
   Capitalized asset retirement costs               389,463           382,550
   Drilling and operating equipment               1,946,805         2,109,993
   Land, buildings and improvements               1,066,571         1,065,371
   Automotive, office and
     other property and equipment                 1,182,613         1,160,617
                                                 ----------        ----------
                                                 22,686,981        20,803,759
   Less - accumulated depletion,
     depreciation, amortization
     and valuation allowances                   (18,687,908)      (17,125,834)
                                                 ----------        ----------
         Total property and equipment             3,999,073         3,677,925
                                                 ----------        ----------
OTHER ASSETS
   Deferred income taxes                            708,500           485,400
   Deposits                                         250,000           250,000
   Other assets                                       7,380            17,013
                                                 ----------        ----------
         Total other assets                         965,880           752,413
                                                 ----------        ----------
         Total assets                           $10,629,807       $10,142,014
                                                 ==========        ==========

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

</Table>












<PAGE> 30
                              PYRAMID OIL COMPANY
                                BALANCE SHEETS
                      LIABILITIES AND SHAREHOLDERS' EQUITY

<Table>
<Caption>
                                                     December 31,
                                              ----------------------------
                                                  2010              2009
                                              ----------        ----------
<S>                                           <C>               <C>
CURRENT LIABILITIES:
   Accounts payable                         $    73,374        $    88,170
   Accrued professional fees                    122,506            138,381
   Accrued taxes, other than
     income taxes                                63,361             62,310
   Accrued payroll and related costs             60,365             51,606
   Accrued royalties payable                    193,052            159,933
   Accrued insurance                             86,888             54,947
   Accrued income taxes                          12,800                 --
   Current maturities of long-term debt          13,473             20,640
                                              ---------         ----------
      Total current liabilities                 625,819            575,987
                                              ---------         ----------
LONG-TERM DEBT, net of current
 maturities                                      26,946                 --
                                              ---------         ----------

LIABILITY FOR ASSET RETIREMENT OBLIGATIONS    1,235,193          1,193,324
                                              ---------         ----------

                                              1,887,958          1,769,311
      Total liabilities                       ---------         ----------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY:
   Preferred stock, no par value
     Authorized - 10,000,000 shares
     Issued and outstanding - none                   --                 --
   Common stock, no par value
     (Note 11,12 & 13)
     Authorized - 50,000,000 shares
     Issued and outstanding -
       4,677,728 shares                       1,639,228          1,515,945
   Retained earnings                          7,102,621          6,856,758
                                             ----------         ----------
      Total stockholders' equity              8,741,849          8,372,703
                                             ----------         ----------
Total liabilities and stockholders' equity  $10,629,807        $10,142,014
                                             ==========         ==========

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

</Table>










<PAGE> 31

                             PYRAMID OIL COMPANY
                           STATEMENTS OF OPERATIONS

<Table>
<Caption>                                      Year ended December 31,
                                       --------------------------------------
                                          2010          2009          2008
                                       ----------    ----------    ----------
<S>                                    <C>          <C>           <C>
REVENUES:
  Oil and gas sales                   $ 4,515,211   $ 3,311,895   $ 6,610,628
  Gain on sales of fixed assets           320,556            --           500
                                       ----------    ----------    ----------
                                        4,835,767     3,311,895     6,611,128
                                       ----------    ----------    ----------
COSTS AND EXPENSES:
  Operating expenses                    1,576,892     1,411,721     1,941,888
  Exploration costs                            --            --       (28,812)
  General and administrative              874,899       924,676     1,001,791
  Stock based compensation                123,283       209,935       167,400
  Taxes, other than income and
    payroll taxes                         128,351       147,724       131,215
  Provision for depletion,
    depreciation and amortization         703,094       639,738       944,168
  Valuation allowances                  1,222,527       358,757     1,162,379
  Accretion expense                        34,955        41,618        68,832
  Other costs and expenses                118,043       115,164       128,090
                                        ---------     ---------    ----------
                                        4,782,044     3,849,333     5,516,951
                                        ---------     ---------    ----------
OPERATING INCOME (LOSS)                    53,723      (537,438)    1,094,177
                                        ---------     ---------    ----------
OTHER INCOME (EXPENSE):
  Interest income                          43,601        75,427        88,792
  Other income (expense)                  (14,061)       14,400        28,431
  Interest expense                           (300)       (1,313)       (2,235)
                                       ----------     ---------     ---------
                                           29,240        88,514       114,988
                                       ----------     ---------     ---------
INCOME (LOSS) BEFORE INCOME
 TAX PROVISION (BENEFIT)                   82,963      (448,924)    1,209,165
   Income tax provision (benefit)
     Current                              109,100      (195,282)      312,710
     Deferred                            (272,000)     ( 64,355)     (617,245)
                                       ----------     ---------    ----------
                                         (162,900)     (259,637)     (304,535)
                                       ----------     ---------    ----------
NET INCOME (LOSS)                     $   245,863   $  (189,287)  $ 1,513,700
                                       ==========     =========    ==========

The accompanying notes are an integral part of these statements.

</Table>











<PAGE> 32

                             PYRAMID OIL COMPANY
                           STATEMENTS OF OPERATIONS

<Table>
<Caption>                                      Year ended December 31,
                                       --------------------------------------
                                          2010          2009          2008
                                       ----------    ----------    ----------
<S>                                    <C>          <C>           <C>

BASIC INCOME (LOSS)
  PER COMMON SHARE                    $      0.05   $     (0.04)  $      0.32
                                       ==========     =========     =========
DILUTED INCOME (LOSS)
  PER COMMON SHARE                           0.05   $     (0.04)  $      0.32
                                       ==========     =========     =========
Weighted average number of
 common shares outstanding              4,677,728     4,677,728     4,677,728
                                       ==========     =========     =========
Diluted average number of
 common shares outstanding              4,686,003     4,677,728     4,713,055
                                       ==========     =========     =========


The accompanying notes are an integral part of these statements.

</Table>





































<PAGE> 33

                              PYRAMID OIL COMPANY

                       STATEMENTS OF SHAREHOLDERS' EQUITY


<Table>
<Caption>

                           Common Shares                            Total
                            Issued and     Common      Retained  Stockholders'
                            Outstanding     Stock      Earnings     Equity
                           -------------  ----------  ----------  ----------
<S>                        <C>            <C>         <C>         <C>

Balances, December 31, 2007   4,677,728   $1,071,610  $5,532,345  $6,603,955

  Severance award agreement          --      165,400          --     165,400

  Stock based compensation           --       69,000          --      69,000

  Net income                         --           --   1,513,700   1,513,700
                              ---------    ---------   ---------   ---------
Balances, December 31, 2008   4,677,728    1,306,010   7,046,045   8,352,055

  Severance award agreement          --      209,935          --     209,935

  Net (loss)                         --           --    (189,287)   (189,287)
                              ---------    ---------   ---------   ---------
Balances, December 31, 2009   4,677,728    1,515,945   6,856,758   8,372,703

  Severance award agreement          --      113,500          --     113,500

  Stock based compensation           --        9,783          --       9,783

  Net income                         --           --     245,863     245,863
                              ---------    ---------   ---------   ---------
Balances, December 31, 2010   4,677,728   $1,639,228  $7,102,621  $8,741,849
                              =========    =========   =========   =========


The accompanying notes are an integral part of these statements.

</Table>
                         
<PAGE>
<PAGE> 34
                            PYRAMID OIL COMPANY
                          STATEMENTS OF CASH FLOWS


<Table>
<Caption>
                                               Year ended December 31,
                                          ---------------------------------
                                             2010       2009         2008
                                          ---------   --------    ---------
<S>                                       <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                      $  245,863  $ (189,287)  $1,513,700

   Adjustments to reconcile net income
     (loss) to net cash provided
     by operating activities:
      Provision for depletion,
        depreciation, and amortization      703,094     639,738      944,168
      Valuation allowances                1,222,527     358,757    1,162,379
      Accretion expense                      34,955      41,618       68,832
      Exploration costs                          --          --      (28,812)
      Stock based compensation              123,283     209,935      167,400
      Gain on sale of
        property and equipment             (320,556)         --         (500)
      Loss on retirement of fixed assets     18,228          --           --
      Decrease in other assets                9,633          --           --
      Deferred income taxes                (272,000)    (64,355)    (617,245)

   Changes in operating assets
    and liabilities:
      (Increase) decrease in trade
        accounts receivable and
        interest receivable                (  8,222)   (286,648)     429,752
      (Increase) decrease in crude
        oil inventories                    ( 23,601)     19,265      (10,727)
      (Increase) decrease in
        prepaid expenses                   ( 62,181)     17,458      (12,988)
      Increase (decrease) in accounts
        payable and accrued liabilities      56,999    (173,790)      22,410
                                          ---------   ---------    ---------
  Net cash provided by
    operating activities                  1,728,022     572,691    3,638,369
                                          ---------   ---------    ---------

      The accompanying notes are an integral part of these statements.

</Table>

















<PAGE> 35
                                PYRAMID OIL COMPANY
                              STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
<Table>
<Caption>
                                                Year ended December 31,
                                           ---------------------------------
                                             2010        2009         2008
                                           -------     -------      --------
<S>                                     <C>         <C>          <C>

CASH FLOWS FROM INVESTING ACTIVITIES:

  Capital expenditures                  $(2,258,083) $  (347,866) $(1,126,565)
  Payments to acquire
    short-term investments                ( 550,000)    (500,000)  (1,250,000)
  Proceeds from redemption
    of short-term investments               680,000           --           --
  Increase in short-term investments        155,533      (54,962)     (60,120)
  Proceeds from sale of fixed assets        320,556           --          500
                                          ---------    ---------    ---------
  Net cash used in investing activities  (1,651,994)    (902,828)  (2,436,185)
                                          ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments on long-term debt     ( 20,640)     (23,901)     (26,869)
  Proceeds from issuance
    of long-term debt                        40,419           --           --
  Principal payments from
    loans to employees                        4,300        3,100        2,500
  Loans to employees                        ( 3,400)      (3,800)      (2,700)
                                          ---------    ---------    ---------
Net cash provided by
  (used in) financing activities             20,679      (24,601)     (27,069)
                                          ---------    ---------    ---------
Net increase (decrease) in cash
  and cash equivalents                       96,707     (354,738)   1,175,115

Cash and cash equivalents
  at beginning of year                    1,438,825    1,793,563      618,448
                                          ---------   ----------    ---------
Cash and cash equivalents at
  at end of year                         $1,535,532  $ 1,438,825   $1,793,563
                                          =========   ==========    =========

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the year
  for interest                           $      300    $   1,313    $   2,235
                                          =========     ========     ========
Cash paid during the year
  for income taxes                       $    1,100    $ 168,814    $ 232,946
                                          =========     ========     ========

The accompanying notes are an integral part of these statements.

</Table>








<PAGE> 36
                                 PYRAMID OIL COMPANY
                            NOTES TO FINANCIAL STATEMENTS
                                  DECEMBER 31, 2010

1.  SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Pyramid Oil Company (the Company), a California Corporation, has been in the
oil and gas business continuously for 101 years 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,
Texas and New York that it does not operate.  The Company grants short-term
credit to its customers and historically receives payment within 30 days.

USE 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.
At December 31, 2010, the Company had approximately $1,200,000 of cash and
cash equivalents that were not fully insured by the FDIC.

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.

DEPOSITS

In April 2004, the Company replaced its state of California oil and gas
blanket performance surety bond, with a cash bond in the form of an
irrevocable certificate of deposit in the amount of $250,000.















<PAGE> 37
                                 PYRAMID OIL COMPANY
                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

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 FASB ASC
Topic No. 932.

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 FASB ASC Topic No. 360-10-15, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
(the Statement).  The Statement specifies when an impairment loss should be
recognized and how impairment losses should be measured for long-lived assets
to be held and used and for long-lived assets to be disposed of.  In
accordance with the Statement, the costs of proved oil and gas properties and
equipment are periodically assessed on a lease by lease basis to determine if
such costs exceed undiscounted future cash flows, and if conditions warrant an
impairment reserve will be provided based on the estimated future discounted
cash flows.  The Company recorded an impairment reserve of $1,222,527,
$358,757 and $1,162,379 at December 31, 2010, 2009 and 2008, respectively (see
Note 6).  The accumulated impairment reserve was $3,991,960 and $2,769,430 at
December 31, 2010 and 2009, respectively.


JOINT VENTURE INVESTMENTS

The Company participates in two joint ventures as a non-operator.  The
properties are located in New York and Texas, both are primarily gas
properties.  The Company has a minority interests in both joint ventures.  The
Company's interest in the New York gas wells range from 19 to 38 percent.  The
Company's interest in the Texas joint venture wells range from 6.25 to 12.5
percent.  The Company records its share of revenues, expenses and capital
costs as provided to the Company by the joint-venture operators.  The
accounting polices for the joint venture properties are consistent with the
accounting policies that the Company uses for its wholly-owned properties.












<PAGE> 38

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2010


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 2010, 2009 and 2008
were $29.89, $14.97 and $27.86, 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.


STOCK-BASED COMPENSATION

We account for share-based awards in accordance with the provisions of FASB
ASC Topic No. 718, Compensation - Stock Compensation (ASC 718).  Accordingly,
we measure share-based compensation expense at the grant date, based on the
fair value of the award, and recognize the expense over the employee's
requisite service period using the straight-line method.  The measurement of
share-based compensation expense is based on several criteria including but
not limited to the valuation model used and associated input factors, such as
expected term of the award, stock price volatility, risk free interest rate
and award forfeiture rate.  These inputs are subjective and are determined
using management's judgment.  If differences arise between the assumptions
used in determining share-based compensation expense and the actual factors,
which become known over time, we may change the input factors used in
determining future share-based compensation expense.  Any such changes could
materially impact our results of operations in the period in which the changes
are made and in periods thereafter.  We elected to adopt the alternative
transition method for calculating the tax effects of share-based compensation
and continue to use the simplified method in developing the expected term used
for our valuation of share-based compensation in accordance with ASC 718.

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> 39

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2010

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.

The Company adopted the provisions of FASB ASC Topic No. 740-10-25, Accounting
for Uncertainty in Income Taxes, on January 1, 2007 (ASC 740-10-25).  As a
result of the implementation of ASC 740-10-25, the company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by ASC 740-10-25.  As a result of the
implementation of ASC 740-10-25, the Company recognized no material
adjustments to liabilities or stockholders equity.

The Company files income tax returns in the U.S. Federal jurisdiction, and
California and New York states.  With few exceptions, the Company is no longer
subject to U.S. Federal tax examination for the years prior to 2007.  State
jurisdictions that remain subject to examination range from 2006 to 2009.  The
Company does not believe there will be any material changes in its
unrecognized tax positions over the next 12 months.

The Company's policy is to recognize interest and penalties accrued on any
unrecognized tax benefits as a component of income tax expense.  As of the
date of adoption of ASC 740-10-25, the Company did not have any accrued
interest or penalties associated with any unrecognized tax benefits, nor was
any interest expense recognized during the year ended December 31, 2010.


CONCENTRATION OF CREDIT RISK

The Company sells its crude oil to ConocoPhillips and Kern Oil & Refining,
accounting for approximately 50%, and 46%, respectively, of the Company's
crude oil and gas sales in 2010.  Crude oil sales were approximately 55% and
42% attributable to ConocoPhillips and Kern Oil and Refining, respectively at
December 31, 2009.  While revenue from these customers is significant, and the
loss of any one could have a short-term 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 48% and 52% attributable to ConocoPhillips and Kern Oil and
Refining respectively at December 31, 2010. Trade receivables were
approximately 55% and 44% attributable to ConocoPhillips and Kern Oil and
Refining respectively at December 31, 2009.












<PAGE> 40

                                  PYRAMID OIL COMPANY
                        NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 2010

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued Accounting Standards Update 2010-06, Fair
Value Measurements and Disclosures (Topic 820): Improving Disclosures about
Fair Value Measurements.  This guidance amends the disclosure requirements
related to recurring and nonrecurring fair value measurements and requires new
disclosures on the transfers of assets and liabilities between Level 1 (quoted
prices in active market for identical assets or liabilities) and Level 2
(significant other observable inputs) of the fair value measurement hierarchy,
including the reasons and the timing of the transfers.  Additionally, the
guidance requires a roll forward of activities on purchases, sales, issuance
and settlements of the assets and liabilities measured using significant
unobservable inputs (Level 3 fair value measurements).  The guidance became
effective for the reporting period beginning January 1, 2010, except for the
disclosure on the roll forward activities for Level 3 fair value measurements,
which will become effective for the reporting period beginning January 1,
2011.  Other than requiring additional disclosures, adoption of this new
guidance has not and is not expected to have a significant impact on our
consolidated financial statements.  The Company's adoption of this updated
guidance was not significant to our consolidated financial statements.

In February 2010, the FASB issued updated guidance related to subsequent
events. As a result of this updated guidance, public filers must still
evaluate subsequent events through the issuance date of their financial
statements, however, they are not required to disclose the date in which
subsequent events were evaluated in their financial statements disclosures.
This amended guidance became effective upon its issuance on February 24, 2010
at which time the Company adopted this updated guidance.


RECLASSIFICATIONS

Certain reclassifications have been made to the prior financial statements to
conform to the 2010 presentation.


REVENUE RECOGNITION

The Company recognizes sales when: (1) persuasive evidence of an arrangement
exists; (2) product delivery has occurred; (3) pricing is fixed or
determinable; and (4) collection is reasonably assured.  To satisfy these
criteria, the Company: (1) has crude oil sales contracts with its crude oil
purchasers; (2) records revenue based upon receipt of evidence of shipment of
crude oil and when risk of loss and title transfer has occurred; (3) the
Company's crude oil contracts specify the pricing terms which are fixed and
determinable; (4) validates creditworthiness through past payment history and
other financial date.  Sales rebates, discounts and customer returns are not
applicable to the oil and gas industry.


TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Our accounts receivable are unsecured and are at risk to the extent such
amounts become uncollectible.  The Company has had the same two major
customers for approximately 20 years with no history of non-payment or
default.  Pursuant to the terms of the crude oil sales contracts, the Company
receives payment around the 20th of the month following crude oil shipments.
The Company has established a nominal allowance for doubtful accounts due to
the Company's evaluation of its customers past payment history,
creditworthiness and other financial data.

<PAGE> 41
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost less accumulated depreciation and
amortization.  Depreciation is recorded on the straight-line basis over the
estimated useful lives of the assets, which range from 3 to 19 years.
Maintenance and repairs are charged to operations as incurred, while
significant improvements are capitalized.  Upon retirement or disposition of
property, the asset and related accumulated depreciation or amortization is
removed from the accounts and any resulting gain or loss is charged to
operations.  The carrying value of property and equipment is assessed
periodically and/or when factors indicating impairment are present.  We
recognize impairment losses when the expected cash flows are less than the
asset's carrying value, in which case the asset is written down to its
estimated fair value.


2.  FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted the authoritative guidance on
fair value measurements. Fair value is defined as an exit price, representing
the amount that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. As such, fair
value is a market-based measurement that should be determined based on
assumptions that market participants would use in pricing an asset or a
liability. As a basis for considering such assumptions, the guidance
establishes a three-tier value hierarchy, which prioritizes the inputs used in
the valuation methodologies in measuring fair value:

     Level 1 - Observable inputs that reflect quoted prices (unadjusted) for
identical assets or liabilities in active markets.

     Level 2 - Include other inputs that are directly or indirectly observable
in the marketplace.

     Level 3 - Unobservable inputs which are supported by little or no market
activity.

The fair value hierarchy also requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring
fair value.

In accordance with this guidance, we measure our cash equivalents and short-
term investments at fair value. Our cash equivalents and short-term
investments are classified within Level 1. Cash equivalents and short-term
investments are valued primarily using quoted market prices utilizing market
observable inputs. At December 31, 2010, cash equivalents and short term
investments consisted of certificates of deposit measured at fair value on a
recurring basis. Fair values of our certificates of deposit were $3,463,138,
of which $404,610 was included in cash equivalents and $3,058,528 were
included in short-term investments at December 31, 2010.  Fair values of our
certificates of deposit were $3,684,895, of which $340,833 was included in
cash equivalents and $3,344,061 were included in short-term investments at
December 31, 2009.

Effective January 1, 2009, the Company adopted, the FASB staff position that
delayed the guidance on fair value measurements for non financial assets and
non financial liabilities. The adoption of this guidance did not have a
material impact on the Company's consolidated financial statements.




<PAGE> 42
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010


3.  LONG-TERM DEBT AND LINE OF CREDIT

Long-term debt at December 31, 2010 and 2009, is summarized as follows:

<Table>                                                  December 31,
<Caption>                                           ----------------------
                                                       2010         2009
                                                    ---------    ---------
<S>                                                 <C>          <C>
  Note payable to GMAC, secured by equipment
    purchased with the proceeds of the loan,
    payable in monthly installments of $1,193
    principal and interest, interest at 3.9%
    final payment in 2010.                           $     --    $  11,714

 Note payable to GMAC, secured by equipment
    purchased with the proceeds of the loan,
    payable in monthly installments of $909
    principal and interest, interest at 3.9%
    final payment in 2010.                                 --        8,926


 Note payable to Ally, secured by equipment
    purchased with the proceeds of the loan,
    payable in monthly installments of $1,123
    principal, interest at 0.0%
    final payment in 2014.                             40,419           --

                                                      -------      -------
                                                       40,419       20,640
  Less - current maturities                            13,473       20,640
                                                      -------      -------
                                                     $ 26,946     $     --
                                                      =======      =======
</Table>


At December 31, 2010 approximately $42,000 of gross property and equipment
was pledged as collateral to secure $40,000 principal amount of long-term
debt.

Maturities of long-term debt are as follows:

<Table>
<Caption>
            <S>                                      <C>
            Year ending December 31, 2011           $  13,473
                                     2012              13,473
                                     2013              13,473
                                                      -------
                                                     $ 40,419
                                                      =======
</Table>

At December 31, 2010, the Company had an unsecured line of credit with a bank,
under which the Company may borrow up to $500,000 through May 31, 2011.
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, 2010.



<PAGE> 43
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010


4.   INCOME TAXES

   Income tax provision (benefit) consists of the following:

<Table>
<Caption>
                                            Year Ended December 31,
                                      -----------------------------------
                                       2010           2009          2008
                                      -------        -------       ------
<S>                                  <C>            <C>           <C>
   Federal income taxes:
     Current                        $  92,000      $(193,411)    $ 276,170
     Deferred                        (211,700)       (54,975)     (527,245)
                                      -------        -------       -------
                                     (119,700)      (248,386)     (251,075)
                                      -------        -------       -------
   State income taxes:
     Current                           17,100         (1,871)       36,540
     Deferred                        ( 60,300)        (9,380)      (90,000)
                                      -------        -------       -------
                                     ( 43,200)       (11,251)      (53,460)
                                      -------        -------       -------
   Income tax provision (benefit)   $(162,900)     $(259,637)    $(304,535)
                                      =======        =======       =======
</Table>


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>                                          Year Ended December 31,
<Caption>                                 -----------------------------------
                                            2010         2009          2008
                                          --------     --------      --------
<S>                                     <C>          <C>           <C>
   Federal income tax expense
     (benefit) at statutory rate         $  28,207    $(152,634)    $ 408,745
   Statutory depletion                    (169,589)          --      (551,762)
   Prior period tax changes                     --      (93,584)     (136,960)
   State income taxes                       17,100      (15,094)        5,439
   Other                                  ( 38,618)       1,675       (29,997)
                                          --------     --------      --------
   Income tax provision (benefit)        $(162,900)   $(259,637)    $(304,535)
                                          ========     ========      ========
</Table>












<PAGE> 44

                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010


The components of net deferred tax asset (liability) are as follows:

<Table>
<Caption>
                                             December 31,
                               ---------------------------------------
                                   2010          2009          2008
                               -----------   -----------   -----------
<S>                           <C>             <C>           <C>
Current deferred taxes:
  Gross assets                $    245,100   $   196,200   $   107,000
  Gross liabilities                     --            --            --
                                ----------    ----------    ----------
                                   245,100       196,200       107,000
                                ----------    ----------    ----------
Noncurrent deferred taxes:
  Gross assets                   2,474,700     2,251,600     2,272,245
  Gross liabilities                     --            --            --
  Valuation allowance           (1,766,200)   (1,766,200)   (1,762,000)
                                ----------     ---------     ---------
                                   708,500       485,400       510,245
                                ----------     ---------     ---------
                               $   953,600   $   681,600   $   617,245
                                ==========     =========     =========
</Table>


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

<Table>
<Caption>
                                                  December 31,
                                    ---------------------------------------
                                        2010          2009          2008
                                    -----------   -----------   -----------
<S>                                <C>            <C>           <C>
    Accounts receivable             $     1,600    $    1,600   $     1,600
    Asset retirement obligations        482,700       466,000       449,000
    Statutory depletion
      carryover                       1,766,200     1,766,200     1,762,000
    Accrued liabilities                 243,500       194,600       107,000
                                     ----------     ---------     ---------
    Total deferred tax assets         2,494,000     2,428,400     2,319,600
    Property and equipment              225,800        19,400        59,645
    Valuation allowance              (1,766,200)   (1,766,200)   (1,762,000)
                                     ----------     ---------     ---------
                                    $   953,600   $   681,600   $   617,245
                                     ==========     =========     =========
</Table>

At December 31, 2010, a valuation allowance has been provided against the
statutory depletion carryover due to the uncertainty of its future
utilization.






<PAGE> 45
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

The Company believes that its estimate of deferred tax assets and
determination to record a valuation allowance against the statutory depletion
carryover are critical accounting estimates because they are subject to, among
other things, an estimate of future taxable income, which is susceptible to
change and dependent upon events that may or may not occur, and because the
impact of recording a valuation allowance may be material to the assets
reported on the balance sheet and results of operations.

At December 31, 2010, the Company has Federal income tax net operating loss
carrybacks/carryforwards of approximately $88,000.  For California franchise
tax purposes, as of December 31, 2010, the Company has net operating loss
carryforwards of approximately $15,000.

At December 31, 2010, the Company has, for Federal income tax purposes, a
statutory depletion carryover of approximately $4,544,000, which currently has
no expiration date.

The Company adopted the provisions of FASB ASC Topic No. 740-10-25 (ASC 740-
10-25), Accounting for Uncertainty in Income Taxes, on January 1, 2007.  As a
result of the implementation of ASC 740-10-25, the company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by ASC 740-10-25.  As a result of the
implementation of ASC 740-10-25, the Company recognized no material
adjustments to liabilities or stockholders equity.

The Company files income tax returns in the U.S. Federal jurisdiction, and
California and New York states.  With few exceptions, the Company is no longer
subject to U.S. Federal tax examination for the years prior to 2007.  State
jurisdictions that remain subject to examination range from 2006 to 2009.  The
Company does not believe there will be any material changes in its
unrecognized tax positions over the next 12 months.

The Company policy is to recognize interest and penalties accrued on any
unrecognized tax benefits as a component of income tax expense.  As of the
date of adoption of ASC 740-10-25, the Company did not have any accrued
interest or penalties associated with any unrecognized tax benefits, nor was
any interest expense recognized during the year ended December 31, 2010.


5. 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 (Santa Fe Energy
lease) 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 $195,000, $188,500 and
$462,800 in 2010, 2009 and 2008, respectively.

As a director, Mr. Alexander has abstained from voting on any of the above
matters that have been brought before the Board of Directors, involving the
Santa Fe lease.  See Note 13 for discussion of severance awards entered into
with Mr. Alexander.








<PAGE> 46
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

6. FOURTH QUARTER RESULTS (UNAUDITED)

During the fourth quarter of 2010, the Company made adjustments to the
carrying value of some of one of its oil and gas properties.  The Company
recorded a valuation allowance in the amount of $237,647 at December 31, 2010
to reflect the change in the projected future discounted net cash flows for
this property, as the result of the analysis of the Company's oil and gas
reserves by independent consultants.  During the fourth quarter of 2010, the
Company recorded a valuation allowance of $117,412 against one of the
Company's joint venture wells in Texas.  The Company also recorded additional
depletion of $27,010 on its oil and gas properties as a result of the
analysis of the Company's oil and gas reserves by independent consultants at
December 31, 2010.

During the fourth quarters of 2009 and 2008, the Company made adjustments to
the carrying value of some of its oil and gas properties.  The Company
recorded a valuation allowance in the amount of $358,757 and $1,162,379, as of
December 31, 2009 and 2008, respectively, to reflect the change in the
projected future undiscounted net cash flows for the properties, as the
result of the analysis of the Company's oil and gas reserves by independent
consultants.  The adjustment at December 31, 2009, of $358,727, is due to
write-downs of the Company's investment in two natural gas wells drilled by
the Texas joint venture.  The economic results from the first well during 2009
and the projected future discounted net cash flows from the second well did
not support the costs that had been capitalized at December 31, 2009.

During the fourth quarter of 2008, the Company recorded additional depletion
of approximately $60,000 on its oil and gas properties as a result of the
analysis of the Company's oil and gas reserves by independent consultants.


7. COMMITMENTS AND CONTINGENCIES

The Company is liable for future dismantlement and abandonment costs
associated with its oil and gas properties.  These costs include down-hole
plugging and abandonment of wells, future site restoration, post closure and
other environmental exit costs.  The costs of future dismantlement and
abandonment have been accrued and recorded in the financial statements.  See
Note 10, Assets Retirement Obligations.

The Company is subject to potential 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 Company's financial position or
the results of its operations.  The Company did not have any pending
litigation at December 31, 2010.

In February 2002, the Company entered into an employment agreement with
John H. Alexander pursuant to which Mr. Alexander agreed to serve as the
Company's Vice President. On June 3, 2004, Mr. Alexander was appointed as the
Company's President and Chief Executive Officer.  The employment agreement is
for an initial term of six years, which term automatically renews annually if
written notice is not tendered.

Pursuant to the employment agreement, the Company may terminate Mr.
Alexander's employment with or without cause at any time before its term
expires upon providing written notice.  In the event the Company terminates
Mr. Alexander's employment without cause, Mr. Alexander would be entitled to
receive a severance amount equal to his annual base salary and benefits for
the balance of the term of his employment agreement.  In the event of
termination by reason of Mr. Alexander's death or permanent disability, his

<PAGE> 47
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

legal representative will be entitled to receive his annual salary and
benefits for the remaining term of his employment agreement.  In the event of,
or termination following, a change in control of the Company, as defined in
the agreement, Mr. Alexander would be entitled to receive his annual salary
and benefits for the remainder of the term of his agreement.  In the event
that Mr. Alexander is terminated the Company would incur approximately
$600,000 in costs.

The Company has been notified by the United States Environmental Protection
Agency (EPA) of a final settlement offer to settle its potential liability as
a generator of waste containing hazardous substances that was disposed of at a
waste disposal site in Santa Barbara County.  The Company has responded to the
EPA by indicating that the waste contained petroleum products that fall within
the exception to the definition of hazardous substances for petroleum-related
substances of the pertinent EPA regulations.  Management has concluded
that under both Federal and State regulations no reasonable basis exists for
any valid claim against the Company.  As such, the likelihood of any
settlement is deemed remote.


8.  GAIN ON SALE OF FIXED ASSETS

On July 28, 2010, the Company entered into a Purchase and Sale Agreement for
the sale of a portion of its Texas joint venture leaseholds.  Pursuant to the
agreement, the Company agreed to sell to the buyers 5% of the working interest
of the Company's Texas joint venture, subject to certain prior agreements and
encumbrances.  The purchase price for the assigned interest is $320,566.
After the sale, the Company continues to own a 7.5% working interest in the
assets.  The Company recognized a gain on the sale of the Texas leasehold
interests in the amount of $320,566.  The leasehold interests had been
previously fully amortized.


9.  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 $9,521, $10,428
and $12,834 were made during the years ended December 31, 2010, 2009 and 2008,
respectively.


10.  ASSETS RETIREMENT OBLIGATIONS

The Company recognizes a liability at discounted fair value for the future
retirement of tangible long-lived assets and associated assets retirement cost
associated with the petroleum and natural gas properties. The fair value of
the liability is capitalized as part of the cost of the related asset and
amortized to expense over its useful life. The liability accretes until the
date of expected settlement of the retirement obligations. The related
accretion expense is recognized in the statement of operations. The provision
will be revised for the effect of any changes to timing related to cash flow
or undiscounted abandonment costs. Actual expenditures incurred for the
purpose of site reclamation are charged to the asset retirement obligations to
the extent that the liability exists on the balance sheet. Differences between
the actual costs incurred and the fair value of the liability recorded are
recognized in income in the period the actual costs are incurred.



<PAGE> 48
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

There are no legally restricted assets for the settlement of asset retirement
obligations.  The Company has recognized deferred tax benefits of
approximately $482,700 for the asset retirement obligations as of December 31,
2010.  A reconciliation of the Company's asset retirement obligations from the
periods presented are as follows:

<Table>
<Caption>
                                               December 31,
                                    ---------------------------------
                                      2010         2009         2008
                                    ---------   ---------    ---------
<S>                                 <C>         <C>         <C>
Beginning balance                 $1,193,324   $1,151,706   $1,010,903
  Incurred during the period              --           --           --
  Additions for new wells              6,942           --        9,394
  Accretion expense                   34,927       41,618      131,409
                                   ---------    ---------    ---------
Ending Balance                    $1,235,193   $1,193,324   $1,151,706
                                   =========    =========    =========
</Table>


11.  STOCK SPLIT

On June 5, 2008, the Company's Board of Directors approved a 5 for 4 stock
split payable on July 3, 2008, to shareholders of record as of June 24, 2008.
The effective date of the split is July 7, 2008.

                                                         Common Stock
                                                           ---------
     Shares outstanding at June 30, 2008                   3,741,721
     Shares issued 5 for 4 stock split July 3, 2008          936,007
                                                           ---------
     Shares outstanding at July 7, 2008                    4,677,728
                                                           =========

All share and per share data for the periods presented have been retroactively
restated to reflect this stock split.


12.  WARRANTS ISSUED

Effective, November 13, 2008, the Company's Board of Directors approved the
issuance of warrants to Pfeiffer High Investor Relations, Inc. (PHIR).  The
Company approved the issuance of warrants to purchase 25,000 shares of common
stock at an exercise price of $3.20 per share.  The warrants will have a
two-year term, will be assignable and will have piggyback registration rights
and cashless exercise provisions.  The Company valued the warrants using the
Black-Scholes model using inputs of a 2 year expected life, 135% volatility
and a 1.19% risk free interest rate.  The Company recorded stock based
compensation of $69,000 for the period ended December 31, 2008.  The Company
has adopted FASB ASC Topic No. 718 (ASC 718) which requires the measurement
and recognition of compensation expense for all share-based payment awards
made to employees, directors and consultants based on estimated fair values.
ASC 718 requires companies to estimate the fair value of the award that is
ultimately expected to vest to be recognized as expense.  ASC 718 requires
companies to estimate the fair value of share-based payment awards on the date
of the grant using an option-pricing model.  The value of the award that is
ultimately expected to vest is recognized as expense over the requisite
service periods.

<PAGE> 49
                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

The Company's determination of fair value of share-based payment awards on the
date of grant uses the Black-Scholes model, which is affected by the Company's
stock price as well as assumptions regarding a number of complex and
subjective variables.  These variables include, but are not limited to, the
expected stock price volatility over the expected term of the awards, and
actual and projected option exercise behaviors.  The Company estimated
expected volatility using historical data.  The fair value of each warrant was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following assumptions:

               Risk-free interest rate                1.19%
               Expected term (years)                   2.0
               Volatility                              135%
               Expected annual dividends                -
               Stock price at November 13, 2008      $3.96

The following table summarizes the warrant activity for the twelve months
ended December 31, 2010:

                                            Number         Weighted-Average
                                         of Warrants        Exercise Price
                                         -----------       ----------------

Outstanding, December 31, 2009               25,000               $3.20

  Granted                                        --                 --
  Exercised                                      --                 --
  Cancelled                                      --                 --
                                             ------                ----
Outstanding, December 31 , 2010              25,000               $3.20
                                             ======                ====

The following summarizes the warrants issued, outstanding and exercisable as
of December 31, 2010:

                      Grant Date                November, 2008
                      Strike Price                   $3.20
                      Expiration Date           November, 2011
                      Warrants Remaining            25,000
                      Proceeds if Exercised        $80,000
                      Call Feature                   None


During 2010, the Company's Board of Directors approved the extension of the
expiration date of the warrants from November of 2010 to November of 2011.
The Company recorded stock based compensation of $9,783 for the period ended
December 31, 2010 as a result of the extension of the expiration date of the
warrants.


13.  SEVERANCE AWARD AGREEMENTS

On September 15, 2010, the Company and John Alexander entered into a Severance
Award Agreement pursuant to which the Company awarded Mr. Alexander a
supplemental payment in connection with his future severance of employment
with the Company and recorded an increase to stockholders' equity of $113,500.
Pursuant to the Severance Award Agreement and following the termination of Mr.
Alexander's employment, he will be entitled to receive (at the Company's
option) 25,000 shares of the Company's common stock or the then-fair market
value of the shares.  As of September 30, 2010, the Company intended to
deliver the Company's common shares for the Severance Award; the Company's
<PAGE> 50

                                 PYRAMID OIL COMPANY
                      NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  DECEMBER 31, 2010

common shares for the Severance Award; therefore, in accordance with SFAS
123(R), management classified the share-based compensation as stockholders'
equity at December 31, 2010

On June 4, 2009, the Company and John Alexander entered into a Severance
Award Agreement pursuant to which the Company awarded Mr. Alexander a
supplemental payment in connection with his future severance of employment
with the Company and recorded an increase to stockholders' equity of $209,935.
Pursuant to the Severance Award Agreement and following the termination of Mr.
Alexander's employment, he will be entitled to receive (at the Company's
option) 25,000 shares of the Company's common stock or the then-fair market
value of the shares.  As of June 30, 2009, the Company intended to deliver
the Company's common shares for the Severance Award; therefore, in accordance
with FASB ASC Topic 718, Compensation-Stock Compensation, management
classified the share-based compensation as stockholders' equity at June 30,
2009.

On December 30, 2008, the Company and John Alexander entered into a Severance
Award Agreement pursuant to which the Company awarded Mr. Alexander a
supplemental payment in connection with his future severance of employment
with the Company and recorded an increase to stockholders' equity of $100,000.
Pursuant to the Severance Award Agreement and following the termination of Mr.
Alexander's employment, he will be entitled to receive (at the Company's
option) 25,000 shares of the Company's common stock or the then-fair market
value of the shares.  As of December 31, 2008, the Company intended to deliver
the Company's common shares for the Severance Award; therefore, in accordance
with FASB ASC Topic 718, Compensation-Stock Compensation, management
classified the share-based compensation as stockholders' equity.


14.  INCENTIVE AND RETENTION PLAN

On January 9, 2007, the Company's Board of Directors adopted an Incentive and
Retention Plan pursuant to which the Company's officers and other employees
selected by the Company's Compensation Committee are entitled to receive
payments if they are employed by the Company as of the date of a 'Corporate
Transaction,' as defined in the Incentive and Retention Plan.  A 'Corporate
Transaction' includes certain mergers involving the Company, sales of Company
assets, and other changes in the control of the Company, as specified in the
Incentive and Retention Plan.  In general, the amount that is payable to each
plan participant will equal the number of plan units that have been granted to
him or her, multiplied by the increase in the value of the Company between
January 9, 2007 and the date of a Corporate Transaction. There has been no
Corporate Transaction since the adoption of the Incentive and Retention Plan.


15.  REGISTRATION STATEMENT ON FORM S-3

The Company filed a shelf registration statement on Form S-3 with the
Securities and Exchange Commission (SEC) on December 22, 2009, that became
effective on January 14, 2010.  The registration statement is designed to
provide the Company the flexibility to offer and sell from time to time up to
$20 million of the Company's common stock.  The Company may offer and sell
such securities through one or more methods of distribution, subject to market
conditions and the Company's capital needs.  The terms of any offering under
the shelf registration statement will be established at the time of such
offering and will be described in a prospectus supplement filed with the SEC
prior to the completion of the offering.  The Company has not filed any
supplemental prospectus with the SEC or sold any common stock under this
registration statement.
<PAGE>
<PAGE> 51
                                 PYRAMID OIL COMPANY
                          SUPPLEMENTAL INFORMATION (UNAUDITED)
                            OIL AND GAS PRODUCING ACTIVITIES
                                  DECEMBER 31, 2010


FASB ASC Topic 932, Extraction Activities - Oil and Gas, 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, 2010, 2009 and 2008
were as follows:

<Table>
<Caption>
                                         2010         2009         2008
                                      ----------   ----------   ----------
<S>                                  <C>          <C>          <C>
Proved properties                    $17,922,900  $15,906,600  $15,576,800
Unproved properties
  being amortized                        178,600      178,600      178,600
Unproved properties
  not being amortized                         --           --           --
Capitalized asset retirement costs       389,500      382,600      382,600
Accumulated depletion,
  depreciation, amortization
  and valuation allowances           (15,755,500) (14,093,800) (13,209,000)
                                      ----------   ----------   ----------
                                     $ 2,735,500  $ 2,374,000  $ 2,929,000
                                      ==========   ==========   ==========
</Table>


<PAGE>
<PAGE> 52
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                  DECEMBER 31, 2010


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

<Table>
<Caption>
                                  2010            2009           2008
                              ------------   -------------  -------------
                               Oil     Gas      Oil    Gas     Oil    Gas
                             (MBbls) (MMCF)  (MBbls) (MMCF) (MBbls) (MMCF)
                              -----   ----    -----   ----   -----   ----
<S>                          <C>     <C>     <C>     <C>    <C>     <C>
Proved developed and
 undeveloped reserves:
  Beginning of year            506      81     471     155     806    331
  Revisions of previous
    estimates                   92    ( 28)     92     (69)   (270)  (228)
  Extensions, discoveries
    and other additions         --      --      --      --      --     57
  Production                   (60)    ( 9)    (57)    ( 5)    (65)   ( 5)
                              ----    ----    ----    ----    ----   ----
  End of year                  538      44     506      81     471    155
                              ====    ====    ====    ====    ====   ====
Proved developed reserves:
  Beginning of year            383      43     447      59     660     64
                              ====    ====    ====    ====    ====   ====
  End of year                  433      35     383      43     447     59
                              ====    ====    ====    ====    ====   ====
Proved undeveloped reserves:
  Beginning of year            123      38      24      96     146    267
                              ====    ====    ====    ====    ====   ====
  End of year                  105       8     123      38      24     96
                              ====    ====    ====    ====    ====   ====

</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 can result from analysis of new
information, as well as from additional production experience or from a change
in economic factors.  The primary factor that has impacted the revisions of
previous estimates of crude oil and natural gas reserves noted above is from a
change in crude oil and natural gas prices used to determine the valuation of
year-end reserves.  Higher crude oil and natural gas prices cause certain oil
and gas leases to become more profitable, thus generating additional reserves.
Net average crude oil prices (average crude oil sales prices net of operating
costs, production taxes and development costs) used to value the year-end
reserves increased by approximately $12.60 per barrel at December 31, 2010 and
by $21.90 per barrel at December 31, 2009.  The crude oil prices used for
valuation purposes decreased by approximately $53.00 per barrel at December
31, 2008.

The decrease in revisions of previous estimates for natural gas reserves at
December 31, 2010, is due primarily to one of the Company's Texas joint
venture wells.  During 2010, this well started producing exclusively crude oil
due to work that was done on this well in 2010.  Natural gas prices used to
value the year-end reserves decreased by approximately $3.16 per MCF at
December 31, 2009.  The revisions of previous estimates (decrease of 228,000
MCF's) of natural gas reserves at December 31, 2008 is due primarily to the
Texas natural gas joint venture.  The natural gas well that was drilled in
2008 did not yield the volumes that were initially projected.

<PAGE> 53
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 DECEMBER 31, 2010

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.


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

<Table>
<Caption>
                                            December 31,
                               --------------------------------------
                                  2010          2009          2008
                               ----------    ----------    ----------
<S>                            <C>           <C>           <C>
Proved developed and
 undeveloped reserves
  (Present value before
   income taxes)              $13,068,000   $ 9,158,000   $ 4,106,000
                               ==========    ==========    ==========

</Table>

FASB ASC Topic 932, Extraction Activities - Oil and Gas, 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, FASB ASC Topic 932 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,
2010, 2009 and 2008 were as follows:

<Table>
<Caption>
                                       2010         2009           2008
                                     --------      -------        -------
<S>                                <C>           <C>            <C>
Property acquisition costs         $   60,000    $       --    $  393,200
Exploration costs - expensed               --            --       (28,800)
Development costs                   2,113,600       329,800     1,030,500
Asset retirement costs                  6,900            --        72,000

</Table>














<PAGE> 54
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 DECEMBER 31, 2010

The results of operations for oil and gas producing activities for the years
ended December 31, 2010, 2009 and 2008 were as follows:

<Table>
<Caption>
                                     2010          2009         2008
                                  ----------    ----------    ----------
<S>                              <C>           <C>           <C>
Sales                            $ 4,515,000   $ 3,312,000   $ 6,611,000
Production costs                   1,698,000     1,552,000     2,066,000
Exploration costs                         --            --       (29,000)
Accretion expense                     35,000        42,000        69,000
Depletion, depreciation
  and amortization                   596,000       526,000       819,000
Valuation allowances               1,223,000       359,000     1,162,000
                                   ---------     ---------     ---------
                                     963,000       833,000     2,524,000
Income tax (benefit)                (163,000)     (260,000)     (305,000)
                                   ---------     ---------     ---------
Results of operations from
  production activities          $ 1,126,000   $ 1,093,000   $ 2,829,000
                                   =========     =========     =========

</Table>


The standardized measure of discounted estimated future net cash flows
relating to proved oil and gas reserves for the years ended December 31, 2010,
2009 and 2008 were as follows:

<Table>
<Caption>
                                     2010          2009          2008
                                  ----------    ----------    ----------
<S>                              <C>           <C>           <C>
Future cash inflows              $41,973,000   $30,177,000   $18,529,000
Future development and
  production costs                19,454,000    15,063,000    11,501,000
Future abandonment costs           1,235,000     1,193,000     1,152,000
Future income tax expense          4,759,000     2,744,000       473,000
                                  ----------    ----------    ----------
Future net cash flow              16,525,000    11,177,000     5,403,000
10% annual discount                6,368,000     3,824,000     1,612,000
Standardized measure              ----------    ----------    ----------
  of discounted future
  net cash flow                  $10,157,000   $ 7,353,000   $ 3,791,000
                                  ==========    ==========    ==========
</Table>














<PAGE> 55
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                  DECEMBER 31, 2010

The principal changes in the standardized measure of discounted future net
cash flows during the years ended December 31, 2010, 2009 and 2008 were as
follows:

<Table>
<Caption>
                                         2010          2009          2008
                                      ----------    ----------    ----------
<S>                                 <C>           <C>           <C>
Extensions                           $        --   $        --   $        --
Revisions of previous estimates
 Price changes                         4,962,000     2,784,000   (19,066,000)
 Quantity estimate                     2,016,000     3,297,000    (4,023,000)
Change in production rates,
  timing and Other                    (2,136,000)    1,421,000      (594,000)
Development costs incurred               941,000       248,000     1,236,000
Changes in estimated future
  development costs                      (46,000)   (1,464,000)      919,000
Estimated future
  abandonment costs                       (4,000)       33,000       (27,000)
Sales of oil and gas, net of
  production costs                    (2,817,000)   (1,760,000)   (4,574,000)
Accretion of discount                    994,000       492,000     2,821,000
                                      ----------    ----------    ----------
                                       3,910,000     5,051,000   (23,308,000)
Net change in income taxes             1,106,000     1,489,000    (7,561,000)
                                      ----------    ----------    ----------
Net (decrease) increase              $ 2,804,000   $ 3,562,000  $(15,747,000)
                                      ==========    ==========    ==========
</Table>

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, as
well as certain abandonment costs, based on year-end cost estimates 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.








<PAGE> 56
                                 PYRAMID OIL COMPANY
                        SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 DECEMBER 31, 2010


The standardized measure of discounted future cash flows before income taxes
increased by $3,910,000 at December 31, 2010.  The increase in income taxes
offset discounted future cash flows by $1,106,000 for a net increase in
future cash flows of $2,804,000 after income taxes as of December 31, 2010.
The major factor contributing to the increase in cash flows is higher net
average crude oil prices (average crude oil sales prices net of operating
costs, production taxes and development costs).  During 2010 Net average crude
oil prices increased by approximately $12.60 per barrel.  This price increase
contributed to an increase in discounted cash flows due to price changes of
$4,962,000 and a change in quantity estimates of $2,016,000.

The standardized measure of discounted future cash flows before income taxes
increased by $5,051,000 at December 31, 2009.  The increase in income taxes
offset discounted future cash flows by $1,489,000 for a net increase in
future cash flows of $3,562,000 after income taxes as of December 31, 2009.
The major factor contributing to the increase in cash flows is higher average
crude oil prices.  Average crude oil prices at December 31, 2009, increased by
approximately $21.90 per barrel.  This price increase contributed to an
increase in discounted cash flows due to price changes of $2,784,000 and a
change in quantity estimates of $3,297,000.  The increase in estimated
discounted future income taxes is due to the increase in the value
of the Company's oil and gas reserves due to the higher crude oil prices.

The standardized measure of discounted future cash flows before income taxes
decreased by $23,308,000 at December 31, 2008.  The decrease in income taxes
offset discounted future cash flows by $7,561,000 for a net decrease in
future cash flows of $15,747,000 after income taxes as of December 31, 2008.
The major factor contributing to the decrease in cash flows is lower
crude oil prices.  Average crude oil prices at December 31, 2008, decreased by
approximately $53.00 per barrel.  This price decrease contributed to a
decrease in discounted cash flows due to price changes of $19,066,000 and a
decrease in quantity estimated revisions of $4,023,000.  The decrease in
estimated discounted future income taxes is due to the decrease in the value
of the Company's oil and gas reserves due to the lower crude oil prices.


























<PAGE> 57
                                PYRAMID OIL COMPANY
                         SUPPLEMENTAL INFORMATION (UNAUDITED)
                                 QUARTERLY RESULTS

<Table>
<Caption>                              2010          2009
                                    ----------    ----------
<S>                                 <C>           <C>
    REVENUES:

      Quarter Ended:
          March 31                  $ 1,001,739   $   594,045
          June 30                     1,228,391       801,901
          September 30                1,420,020       945,413
          December 31                 1,185,617       970,536
                                     ----------    ----------
                                    $ 4,835,767   $ 3,311,895
                                     ==========    ==========
    NET INCOME (LOSS):

      Quarter Ended:
          March 31                  $   180,670   $  (189,215)
          June 30 (a)                  (301,871)      (38,918)
          September 30                  393,800       221,374
          December 31 (b)              ( 26,736)     (182,528)
                                     ----------    ----------
                                    $   245,863   $  (189,287)
                                     ==========    ==========
    INCOME (LOSS) PER COMMON SHARE:

      Quarter Ended:
          March 31                  $       .04   $      (.04)
          June 30 (a)                      (.06)         (.01)
          September 30                      .08           .05
          December 31 (b)                  (.01)         (.04)
                                     ----------    ----------
                                    $       .05   $      (.04)
                                     ==========    ==========
</Table>



(a)  Reflects a valuation allowance of $867,468 recorded during the second
quarter of 2010 for the write-down of the costs of drilling a well in the
second quarter of 2010 that was abandoned as a dry-hole.


(b)  Reflects valuation allowances of $355,000 and $359,000 at December 31,
2010 and 2009, respectively, due to the write-down of certain oil and gas
properties (see Note 6 of Notes to Financial Statements included in Item 8
of this Form 10-K).















<PAGE> 58

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ON ACCOUNTING AND FINANCIAL DISCLOSURE

                         None

ITEM 9A - CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the reports that the
Company files with the Securities and Exchange Commission (the SEC) under the
Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules
and forms and that such information is accumulated and communicated to the
Company's management, including the principal executive and financial
officers, as appropriate, to allow for timely decisions regarding required
disclosure.  As required by SEC Rule 13a-15(b), the Company carried out an
evaluation, under the supervision and with the participation of its
management, including it principal executive and financial officers, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of the end of the period covered by this Annual Report.
Based on the foregoing, the Company's principal executive and financial
officers concluded that the Company's disclosure controls and procedures are
effective to ensure that the information required to be disclosed in the
Company's reports filed or submitted under the Exchange Act is timely
recorded, processed and reported within the time periods specified in the
SEC's rules and forms.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

This report is provided by the Company's management pursuant to Section 404 of
the Sarbanes-Oxley Act of 2002 and the SEC rules promulgated thereunder.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting and for assessing the effectiveness of
internal control over financial reporting.

The Company's control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the Untied States.
The Company's internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company's assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the
United States, and that the Company's receipts and expenditures are being made
only in accordance with authorizations of the Company's management and
directors; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisitions, use, or disposition of the
Company's assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management has assessed the Company's internal control over financial
reporting as of December 31, 2010 based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).  Based on the assessment of
the Company's internal control over financial reporting, management has
concluded that, as of December 31, 2010 the Company's internal control over

<PAGE> 59

financial reporting was effective.

Pursuant to applicable law, this annual report is not required to include an
attestation report of the Company's registered public accounting firm
regarding internal control over financial reporting.

There has been no change in the Company's internal control over financial
reporting during the Company's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


ITEM 9B - OTHER INFORMATION

The Company is aware of no information that was required to be disclosed in a
report on Form 8-K during the fourth quarter of 2010 but was not reported.


                                  PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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 2011 Annual Meeting
of Shareholders.

The Company has adopted a code of ethics that is applicable to all of its
directors, officers and employees.  A copy of the code is available at no
charge to any person who sends a request for a copy to the Corporate
Secretary, Pyramid Oil Company, P.O. Box 832, Bakersfield, California 93302.


ITEM 11 - 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 2011
Annual Meeting of Shareholders.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            AND RELATED STOCKHOLDER MATTERS

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 2011
Annual Meeting of Shareholders.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
            INDEPENDENCE

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 (Santa Fe Energy
lease) 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 $188,500 in 2010, $188,500 in
2009 and $462,800 in 2008.

<PAGE> 60

As a director, Mr. Alexander has abstained from voting on any of the above
matters that have been brought before the Board of Directors involving the
Santa Fe lease.


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The Company hereby incorporates by reference the information contained under
the section entitled ''Principal Accounting Fees and Services'' or a similarly
entitled section from its definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with its 2011 Annual Meeting
of Shareholders.

                                  PART IV


ITEM 15 - EXHIBITS AND FINANCIAL SCHEDULES


         3.1      Restated Articles of Incorporation of Pyramid Oil Company
                  (previously filed by the registrant on December 17, 2009
                  as Exhibit 3.1 to the registrant's Current Report on
                  Form 8-K, and incorporated herein by reference).


         3.2      Amended and Restated Bylaws of Pyramid Oil Company
                  (previously filed by the registrant on December 17, 2009
                  as Exhibit 3.2 to the registrant's Current Report on
                  Form 8-K, and incorporated herein by reference).


        10.1      Employment Agreement of John H. Alexander, dated
                  February 21, 2002 (previously filed by the registrant
                  on March 29, 2002 as Exhibit 10.4 to the registrant's
                  Quarterly Report on Form 10-QSB, and incorporated
                  herein by reference).


        10.2      Severance Award Agreement of John H. Alexander, dated
                  January 9, 2007 (previously filed by the registrant
                  on January 16, 2007 as Exhibit 99.1 to the registrant's
                  Current Report on Form 8-K, and incorporated
                  herein by reference).


        10.3      Severance Award Agreement of John H. Alexander, dated
                  December 30, 2008 (previously filed by the registrant
                  on January 6, 2009 as Exhibit 10.1 to the registrant's
                  Current Report on Form 8-K, and incorporated
                  herein by reference).


        10.4      Severance Award Agreement of John H. Alexander, dated
                  June 4, 2009.


        10.5      Severance Award Agreement of John H. Alexander, dated
                  September 21, 2010 (previously filed by the registrant
                  on November 12, 2010 as Exhibit 10.1 to the registrant's
                  Quarterly Report on Form 10-Q, and incorporated
                  herein by reference).




<PAGE> 61


        23.1      Consent of SingerLewak LLP.


        23.2      Consent of MHA Petroleum Consultants, LLC.


        31.1  Certification of Chief Executive Officer Pursuant to 15 U.S.C.
              Section 7241, as Adopted Pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002.


        31.2  Certification of Chief Financial Officer pursuant to 15 U.S.C.
              Section 7241, as adopted pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002.


        32.1  Certification of Chief Executive Officer pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.


        32.2  Certification of Chief Financial Officer pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.


        99.1  Report dated February 23, 2010 of MHA Petroleum Consultants,
              LLC, independent petroleum engineers.


<PAGE>
<PAGE> 62

                                  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 30, 2011                             By: JOHN H. ALEXANDER
                                           ----------------------
                                             John H. Alexander
                                             Director/President
                                          Chief Executive Officer

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.


     JOHN H. ALEXANDER        Director/President          March 30, 2011
---------------------------     Chief Executive Officer
     John H. Alexander


     MICHAEL D. HERMAN        Director                    March 30, 2011
---------------------------     Chairman of the Board
     Michael D. Herman


      GARY L. RONNING         Director                    March 30, 2011
---------------------------
      Gary L. Ronning


       JOHN E.  TURCO         Director                    March 30, 2011
---------------------------
       John E. Turco


   LEE G. CHRISTIANSON       Corporate Secretary/         March 30, 2011
---------------------------    Principal Accounting and
   Lee G. Christianson         Financial Officer