U.S. 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 August 31, 2003

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 [No Fee Required]

         For the transition period from                 to
                                        ---------------    ---------------

                           Commission File No. 0-20879

                             PYR ENERGY CORPORATION
                 ----------------------------------------------
                (Name of registrant as specified in its charter)

            Maryland                                              95-4580642
    ------------------------                                   ---------------
   (State or jurisdiction of                                  (I.R.S. Employer
 incorporation or organization)                              Identification No.)

        1675 Broadway, Suite 2450, Denver, CO                           80202
     (Address of principal executive offices)                        (Zip Code)

--------------------------------------------------------------------------------
        Registrant's telephone number, including area code (303) 825-3748
                                                           --------------

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

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
   $.001 Par Value Common Stock                 American Stock Exchange


           Securities registered pursuant to Section 12(g) of the Act:
                                      None
                                      ----
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. Yes   X   No
                                              -----    -----

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]

     As of December 11, 2003, the registrant had 23,701,357 common shares
outstanding, and the aggregate market value of the common shares held by
non-affiliates was approximately $9,610,621*. This calculation is based upon the
closing sale price of $0.83 per share on December 11, 2003.

* Without asserting that any of the issuer's directors or executive officers, or
the entities that own 3,079,384 and 3,634,000 shares of common stock are
affiliates, the shares of which they are beneficial owners have been deemed to
be owned by affiliates solely for this calculation.




<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----

PART I.....................................................................  1

     ITEM 1 and ITEM 2.      BUSINESS AND PROPERTIES.......................  1

     ITEM 3.    LEGAL PROCEEDINGS.......................................... 18

     ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........ 18

PART II.................................................................... 18

     ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS........................................ 18

     ITEM 6.    SELECTED FINANCIAL DATA.................................... 20

     ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS........................ 20

     ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES
                ABOUT MARKET RISK.......................................... 27

     ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................ 27

     ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE..................... 27

     ITEM 9A.   CONTROLS AND PROCEDURES.................................... 27

PART III................................................................... 27

     ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT............. 27

     ITEM 11.   EXECUTIVE COMPENSATION..................................... 29

     ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                OWNERS AND MANAGEMENT...................................... 34

     ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............. 36

     ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES..................... 36

PART IV.................................................................... 37

     ITEM 15.   EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K...... 37

SIGNATURES................................................................. 38

CONSOLIDATED FINANCIAL STATEMENTS..........................................F-1

<PAGE>

                                     PART I

ITEM 1 and ITEM 2. BUSINESS AND PROPERTIES

General

     PYR Energy Corporation (referred to as "PYR," the "Company," "we," "us" and
"our") is a development stage independent oil and gas exploration company with a
strategic focus on exploring for and developing significant oil and gas reserves
in deep, structurally complex geologic settings. Although our current focus is
on the Rocky Mountain region as described below, previously our primary drilling
activity has been in the San Joaquin Basin of California and on our East Lost
Hills project there. We initiated this project in 1997 and brought in industry
partners and commenced initial drilling in 1998. During the fiscal years ended
August 31, 2002 and 2003, we focused our exploration efforts on the pre-drill
phases of our other high potential exploration projects in the San Joaquin Basin
and in the Rocky Mountain region. In November 2003, we signed an agreement with
industry partners to test our projects in the Wyoming Overthrust. This agreement
calls for the drilling of our Cumberland Prospect in early calendar year 2004,
with an option to drill and test our Mallard Prospect by the 3rd quarter of
calendar year 2004. We also are seeking one or more industry partners for our
Rogers Pass Project in the Montana Foothills. Although there is no assurance, we
anticipate entering into an agreement during the first calendar quarter of 2004.

     While our main corporate strategy to date has been to focus on high impact
exploration, we are currently evaluating a number of opportunities involving
lower risk exploitation and development drilling. To this end, PYR has entered
into a joint venture agreement to participate in a shallow gas re-development
project in southeast Alberta, Canada. The agreement provides PYR with a 5%
working interest in a project to re-develop shallow gas production within a 4
million acre AMI in southeast Alberta. To date, four prospective projects have
been identified and leased to the joint venture. Re-completion activities on the
first project should begin shortly. PYR also has the option to purchase a 15%
working interest in an expanded AMI of approximately 11 million acres in
Alberta, to pursue similar re-development opportunities. These Canadian projects
provide PYR with exposure to lower risk shallow gas opportunities in a proven
gas production region.

     The Company was incorporated in March 1996 in the state of Delaware under
the name Mar Ventures Inc. Effective as of August 6, 1997, the Company purchased
all the ownership interests of PYR Energy, LLC, an oil and gas exploration
company. On November 12, 1997, the name of the Company was changed to PYR Energy
Corporation. Effective July 2, 2001, the Company was re-incorporated in Maryland
through the merger of the Company into a wholly owned subsidiary, PYR Energy
Corporation, a Maryland corporation.

     The Company's offices are located at 1675 Broadway, Suite 2450, Denver,
Colorado 80202. The telephone number is (303) 825-3748, the facsimile number is
(303) 825-3768 and the Company's web site is www.pyrenergy.com. The Company's
periodic and current reports filed with the Securities and Exchange Commission
can be found on the Company's website.

Developments Since Beginning of Fiscal 2003

Exploration Of Overthrust Properties

     In December 2003, the Company entered into an agreement with two private
oil and gas exploration companies covering the Company's exploration projects in
the Overthrust of Southwestern Wyoming. The agreement calls for an initial well
to be drilled to test the Cumberland Prospect in section 16, T18N, R118W.

     The Cumberland Prospect is a Jurassic Nugget test of an undrilled structure
at the leading edge of the Absaroka Thrust. The Nugget Formation has produced in
excess of 3.70 Tcfe of natural gas from structural closures on the Absaroka
Thrust. The Cumberland prospect is on trend with these productive features, and
is located approximately 5 miles northeast of the Ryckman Creek field. Ryckman
Creek field was discovered in 1975 by Amoco and Chevron, and produced in excess
of 250 Bcfe from the Nugget, prior to abandonment.

     It is currently anticipated that the test well for the Cumberland Prospect
will be drilled early in calendar 2004. PYR Energy will participate with a 10%
working interest in the drilling and will be carried for an additional 22.5%
working interest to casing point in the initial test well. After casing point,
PYR will have a 32.5% working interest in the initial well and all subsequent

                                       1

<PAGE>


wells in the Prospect. The anticipated total depth of the well is estimated to
be 10,600 feet. As part of the agreement, PYR has been reimbursed for certain
exploration and prospect development costs associated with the Cumberland
Prospect. PYR controls 6233 net acres within the Cumberland area of mutual
interest (AMI).

     After drilling of the Cumberland test well, the participants also will have
an option to earn part of PYR's Greater Duck AMI surrounding its Mallard
Prospect at the south end of the giant Whitney Canyon - Carter Creek gas field.
The agreement requires the participants to drill the initial test well at the
Mallard Prospect to earn part of PYR's acreage position within the AMI. PYR
currently controls 4160 net acres of leasehold within the Greater Duck AMI. If
the Mallard Prospect is drilled, PYR will participate with a 5% working interest
and will be carried for an additional 23.75% working interest to casing point in
the initial test well. After casing point, PYR will have a 28.75% working
interest in the initial test well and all subsequent wells in the prospect.

     The Mallard Prospect, seismically identified as a subsidiary structural
feature, is located adjacent to the south end of the Whitney Canyon - Carter
Creek field. Whitney Canyon - Carter Creek, discovered in 1978, has produced
approximately 1.98 Tcfe of natural gas from multiple Paleozoic reservoirs in a
large, complex structural closure on the Absaroka Thrust. The main target
horizon at Mallard Prospect is the Mississippian Mission Canyon Formation at an
estimated depth of approximately 14,500 feet. The Mission Canyon Formation has
accounted for 93% of the cumulative production from Whitney Canyon - Carter
Creek.

     The agreement also provides that the participants can earn interests in
certain other portions of the Company's Overthrust acreage by undertaking other
specified exploration activities.

Property Impairment

     During the fiscal year ended August 31, 2003, the Company recognized
property impairments totaling $3,234,029 in conjunction with its capitalized oil
and gas properties. This non-cash accounting charge includes capitalized costs
incurred at the Company's East Lost Hills project of $451,285, including land
rental and well costs. The remaining amount of the impairment charge includes
capital costs, including land, geological and geophysical costs, associated
primarily with other undeveloped projects that the Company has in the San
Joaquin Basin of California. See below, "--Drilling Activities." As a result of
this write-down, together with the Company's general operating costs and the
absence of significant revenue, the Company reported a net loss of $5,237,613
for its fiscal year ended August 31, 2003. For additional information, see
below, "--Property Impairment" and Note 1 to the Financial Statements included
in this Form 10-K.

East Lost Hills, San Joaquin Basin, California

     During our fiscal year ended August 31, 2003, no drilling or development
activities occurred at our East Lost Hills project. Although the 1998 blow-out
of the original test well, the Bellevue #1-17, evidenced high volumes and
deliverability of hydrocarbons, the project has still not established meaningful
commercial production, and it is unlikely that additional activity will occur on
the project. The Company has written off its entire investment in this project.

     Berkley Petroleum Inc., a wholly owned subsidiary of Anadarko Petroleum
Corporation, the operator at East Lost Hills, has informed the participant group
that it does not intend to participate in additional operations at East Lost
Hills. Significant portions of the leaseholds in the project have expired or
will expire in the near future.

     We have continued to evaluate our ongoing participation in the East Lost
Hills project. Although we do not believe that there has been adequate
evaluation of the Temblor potential at East Lost Hills, the historical cost
structure of operations and the ongoing uncertainties make it very difficult to
continue to participate in this project. We will seek to limit capital
expenditures at East Lost Hills if there occurs a point in time as many of the
ongoing problems associated with the play are mitigated. There is no assurance
that any such mitigation of problems or any additional operations will occur at
East Lost Hills. If additional operations are proposed, we will carefully
evaluate to what extent, if any, we will participate in those operations.

     The ELH #4 well was drilled and completed to a depth of approximately
20,500 feet. Although the well flowed natural gas and liquid hydrocarbons upon
initial production testing, we believe that mechanical difficulties related to
the influx of wellbore debris have prevented an adequate and full evaluation of
the reservoir potential. During initial production testing of the ELH #4, coil

                                       2

<PAGE>


tubing was used to attempt to clean out debris in the wellbore. During these
clean-out operations, a portion of the coil tubing separated and became stuck in
the wellbore. Retrieval operations have not been initiated, and it is uncertain
whether the coil tubing can be removed from the wellbore. The well is currently
shut-in. Although the participant group has not approved or consented, the
operator has formally proposed to plug and abandon the well.

     The ELH #9 well was drilled and completed to a depth of approximately
20,100 feet. Initially, the well was production tested in the Kreyenhagen shale
underlying the Temblor formation. Non-commercial hydrocarbons were encountered
and tested from this zone, and the participants agreed to move up-hole and test
the lower Temblor section. These zones were perforated by wireline and limited
production of hydrocarbons was encountered. We believe that the perforation and
testing methodology may have been inadequate to fully evaluate the reservoir
potential and that the production results are inconclusive. This well is
currently shut-in. Although the participant group has not approved or consented,
the operator has formally proposed to plug and abandon the well.

     The third well, the AERA Energy LLC #1-22 NWLH, located approximately 3.5
miles northwest of the ELH #1 well, was drilled to a total depth of 20,457 feet.
The well encountered hydrocarbon shows and gas flow from several zones in the
Temblor, and casing has been installed in preparation for production testing. We
have determined to prioritize our financial resources on other prospects, and
have elected to non-consent to the completion and production testing operations.
We participated in the drilling of this well through a pooling arrangement at a
4.04% working interest.

Markets and Major Customers

     Sales of production from our ownership interest in the ELH #1 well at East
Lost Hills to ChevronTexaco accounted for all of our revenues during fiscal
2003. These revenues currently are accruing at approximately $15,000 per month
net to our interest. ChevronTexaco has gas gathering and processing capabilities
and water disposal facilities in the area. Based on the general demand for gas,
if for some unforeseen reason we were to lose ChevronTexaco as a customer, we
believe that we would be able to find another customer. However, ChevronTexaco
limits the amount of water it accepts at its water disposal facilities. If we
are unable to dispose of produced water at the ChevronTexaco water disposal
facility and if we are not successful in finding an alternative disposal method,
we may not be able to dispose of water and, therefore could not produce and sell
natural gas.

Employees and Office Space

     At August 31, 2003, we had five full time employees. We believe that our
relationship with our employees is satisfactory. None of our employees is
covered by a collective bargaining agreement. We lease approximately 3,800
square feet of office space in Denver, Colorado for our executive and
administrative offices.

Business Strategy

     Our objective is to increase stockholder value per share by adding
reserves, production, cash flow, earnings and net asset value. To accomplish
this objective, we intend to capitalize on our technical expertise in
identifying, evaluating and participating in the exploratory drilling and
development of deep, structurally complex formations. We also intend to build on
our experience and our competitive strengths, which include:

     o    our inventory of California and Rocky Mountain drilling and
          exploration projects,

     o    our control of pre-drill exploration phases,

     o    our expertise in advanced seismic imaging, and

     o    our ability to identify suitable development and exploitation drilling
          opportunities.

                                       3

<PAGE>


To implement our strategy, we seek to:

          Initiate Exploration Drilling on Our Undrilled Projects. We control
          interests in several other exploration projects in the San Joaquin
          Basin and in select areas of the Rocky Mountains. The most notable
          projects in the San Joaquin Basin are our Wedge and Bulldog prospects,
          which are large target reserve, deep Temblor gas prospects located to
          the northwest of our East Lost Hills acreage, and our Blizzard
          prospect which is a light oil Stevens target. In the Rocky Mountains,
          our most notable projects are Cumberland and Mallard, located in
          southwestern Wyoming, and our Montana Foothills project. We have
          recently signed an agreement for the drilling of our Cumberland
          project and an option to drill our Mallard projects. We are currently
          in discussion concerning a possible exploration agreement for our
          Montana Foothills project, but there is no assurance that it will be
          concluded successfully. We also are continuing to market our
          exploration drilling opportunities in California to potential industry
          partners. We expect to commence drilling exploration wells in three to
          four of these projects during calendar 2004, although there is no
          assurance that this will occur.

     o    Continue to Internally Generate Exploration Prospects. We believe that
          by continuing to generate exploration prospects with a special
          emphasis on applying our seismic expertise to deep, structurally
          complex formations, we can identify prospects with significant oil and
          gas reserve potential. We then assemble acreage positions on these
          prospects. This enables us to control costs during the pre-drill
          phases of exploration and to sell a portion of our interests to
          industry participants, while potentially retaining a carried interest
          in the initial exploratory drilling.

     o    Evaluate Low Risk, Shallow Exploitation and Development Drilling
          Opportunities. As part of our ongoing strategy, we are evaluating
          lower risk drilling opportunities relative to our higher risk,
          internally generated, exploration projects. If found to be
          appropriate, these opportunities can provide the Company with suitable
          internal rates of return on investment, geographic and risk
          diversification, and exposure to reserves and potential cash flow. To
          this end, while we have evaluated numerous opportunities, we have
          recently signed joint venture agreements that provide the Company with
          shallow gas re-completion opportunities in southeast Alberta, Canada.
          We continue to review and evaluate additional development and
          exploitation opportunities as they arise.

     o    Carefully evaluate to what extent, if any, we will continue to
          participate in operations at East Lost Hills. The East Lost Hills
          project has been extremely intensive in terms of time, labor and
          funding. Although we feel there is potential for significant gas
          reserves, meaningful production has not been established. Because of
          the current cost structure, continual cost overruns, the lack of a set
          direction for development and the fragmentation of the participant
          group, additional operations may not occur. Even in the event
          additional operations are proposed, we may elect not to participate in
          additional operations.


Significant Projects

     Our exploration activities are focused primarily in the San Joaquin Basin
of California and in select areas of the Rocky Mountains. Advanced seismic
imaging of the structural and stratigraphic complexities common to these regions
provides us with the enhanced ability to identify significant oil and gas
reserve potential. A number of these projects offer multiple drilling
opportunities with individual wells having the potential of encountering
multiple reservoirs.

     The following is a summary of our exploration areas and significant
projects. While actively pursuing specific exploration activities in each of the
following areas, we continually review additional opportunities in these core
areas and in other areas that meet our exploration criteria.

San Joaquin Basin, California

     The San Joaquin Basin is one of the most productive oil and gas producing
basins in the continental United States. Located about 100 miles northwest of
Los Angeles, the basin contains 20 fields classified as giant, with each having
produced over 100 million barrels of oil equivalent.

     The San Joaquin Basin contains six of the 25 largest oil fields in the
United States. All six of these fields were discovered between 1890 and 1911.
The basin accounts for 34% of California's actively producing fields, yet
produces more than 78% of the state's total oil and gas production. Most of the
production within the basin is located along the western and southern end of
Kern County.

                                       4

<PAGE>


     The San Joaquin Basin has been dominated by major oil companies with large
fee acreage holdings and has generally been under-explored by independent
exploration and production companies. The large fields in the basin were
discovered on surface anticlines and produce predominantly heavy oil from depths
of less than 5,000 feet. As a consequence, basin operators have focused on
engineering technologies related to enhanced production practices, including
steam floods and, most recently, horizontal drilling. Deep basin targets, both
structural and stratigraphic in nature, remain largely untested with modern
seismic technology and the drill bit. Our analysis of seismic data combined with
recent discoveries of hydrocarbons at depth, leads us to believe that multiple
deep exploration opportunities exist in the San Joaquin Basin.

     East Lost Hills. During 1997, we identified and undertook technical
analysis of a deep, large, untested structure in the footwall of the Lost Hills
thrust. This prospect lies directly east of and structurally below the existing
Lost Hills field, which has produced in excess of 350 million barrels of oil
equivalent from shallow depths.

     In early 1998, we entered into an exploration agreement with a number of
joint interest partners to participate in the drilling of an initial exploration
well. We received cash for our share of acreage in this project and retained a
working interest of 10.575%. Of our total working interest, 6.475% was carried
in the initial well. During November 2000, we purchased an additional working
interest of 1.5443% at East Lost Hills to bring our current working interest to
12.1193%.

     On May 15, 1998, drilling began on the Bellevue Resources et al. #1-17 East
Lost Hills initial exploration well, located in Kern County, California. The
well had a target depth of 19,000 feet. On November 23, 1998, the well had just
penetrated the uppermost Temblor sand at 17,600 feet when it blew out and
ignited. On December 18, 1998, the Bellevue #1-17R relief well began drilling.
The relief well was drilled to 16,668 feet, where it intersected the Bellevue
#1-17 well bore. On May 29, 1999, the Bellevue #1-17 well was controlled by
pumping heavy mud and cement into the well bore. The Bellevue #1-17 well bore
has been plugged and abandoned, and the Bellevue #1-17R well was sidetracked as
a replacement well into the targeted Temblor formation. The Bellevue #1-17R well
production tested nominal amounts of hydrocarbons and is temporarily shut-in
awaiting a decision to connect to commercial production facilities.

     On August 26, 1999, we and other working interest owners began drilling the
ELH #1 well, approximately two miles northwest of the Bellevue #1-17R well. On
April 12, 2000, this well had drilled to a total depth of 19,724 feet.
Production testing began on May 28, 2000. On July 6, 2000, based on the results
of the production testing and other analysis, we announced a natural gas
discovery at the East Lost Hills field. Onsite production facilities, 8.4 miles
of natural gas pipeline and 4.2 miles of water disposal pipeline were installed
and, on February 6, 2001, we commenced commercial production of natural gas and
liquid hydrocarbons from this well. Production from this well continued
throughout fiscal 2003.

     Since shortly after commencing production on February 6, 2001, the
production from the ELH #1 well has been constrained by the lack of adequate
capacity for disposal of the produced water. Production water has been and
continues to flow through a disposal pipeline connected to disposal facilities
owned by ChevronTexaco. ChevronTexaco limits the amount of water accepted at its
disposal facility. During the fourth quarter of fiscal 2003, the ELH #1 well
produced a total of approximately 92 mmcfe, averaging approximately 1.1 mmcfe
per day. Water production during this period averaged approximately 5,200
barrels per day.

     The ELH #4 well commenced drilling on November 26, 2000 at a location
approximately four miles southeast of the ELH #1 well. This well reached a total
depth of 20,500 feet on January 17, 2002. After installing final casing, the
operator released the drilling rig and shut in the well. During July 2002, the
Kreyenhagen and lower Temblor zones were perforated via wireline for production
testing. The well did flow nominal amounts of natural gas and liquid
hydrocarbons along with debris and water. Because the rig had been released and
removed, the operator brought in a coil tubing unit to attempt to clean out the
debris from the wellbore. During this operation, a portion of the coil tubing
separated from the assembly and became lodged in the wellbore. It is uncertain
whether or not the component of coil tubing can be retrieved. The well is
currently shut-in and although the participant group has not consented or
otherwise agreed, the operator has formally proposed plugging this well.

     The ELH #9 well, located approximately six miles southeast of the ELH #1
well, commenced drilling operations on July 17, 2001. On April 10, 2002, the
well reached total depth of approximately 21,100 feet. Final casing was
installed and the operator released the drilling rig on April 27, 2002. During
July 2002, the Kreyenhagen zone was perforated via wireline for production
testing. This testing resulted in delivery of non-commercial volumes of
hydrocarbons and attempts to stimulate the test zones were unsuccessful. The
lower Temblor was then perforated for production testing. During production
testing, the well flowed nominal amounts of hydrocarbons, water and debris
resulting in plugging of perforations and the wellbore. Coil tubing was used to
clean out the debris and further testing resulted in deliverability of
hydrocarbons in nominal amounts. Due to the perforation and testing methods

                                       5

<PAGE>


used, we view these production tests as inconclusive and do not reflect full
evaluation of the lower Temblor potential. Although there may be additional
productive Temblor zones above the lower Temblor, additional testing has not
been proposed. The operator has formally proposed the plugging of this well,
however the participants have not yet consented or otherwise agreed to this
proposal.

     During fiscal 2002, we participated in the drilling of a third well at East
Lost Hills. The Aera Energy LLC NWLH 1-22 well located in Section 22, T25S-R20E
commenced drilling on August 23, 2001. This well is approximately three and a
half miles northwest of the ELH #1 well. We participated in the drilling of this
well, operated by Aera Energy LLC, through a pooling arrangement at a 4.04%
working interest. On August 18, 2002, this well reached total depth of 20,457
feet. The participants intend to complete the well for production testing,
however we have been notified by the operator that certain participants do not
currently have the financial ability to proceed with the completion and are
attempting to raise additional funds or bring in additional participants. Since
late August 2002, the drilling rig has remained on location on standby rate in
anticipation of the commencement of completion operations. Because we determined
to prioritize our financial resources on other prospects, we notified the
operator of our non-consent election in the completion of this well. The well
was temporarily abandoned in late August 2003 and the rig was released in early
September 2003. It is unknown whether the operator and participants intend to
re-enter the well and attempt a completion at a later date.

     Pyramid Power Prospect. In April 1999, we purchased a working interest in
the Pyramid Power deep natural gas exploration project in the San Joaquin Basin.
This project is outside the East Lost Hills joint venture area. The initial test
well, located in Section 9, T25S-R18E, commenced drilling on November 22, 2001.
On July 17, 2002, the well reached total depth of 20,465 feet. Upon running
final casing, the rig was released. Berkley Petroleum Inc., a wholly owned
subsidiary of Anadarko Petroleum Corporation was operator of the well during
drilling. Upon release of the rig, Oxy Lost Hills Inc. ("Oxy") took over as
operator and Oxy will operate the completion and production testing of this
well. We originally owned a carried working interest in this project of 3.75%,
but assigned 25% of that interest to Oxy to facilitate completion activities.
The well was tested in a number of different zones in the Cretaceous and lower
Temblor. Non-commercial volumes of hydrocarbon gas and liquids were recovered
during the completion attempts. OXY subsequently plugged and abandoned this
wellbore in February 2003. PYR's working interest of 2.81% was carried through
the tanks in this initial test well, and as a result, PYR incurred no capital
costs associated with the drilling and abandonment of the well.

     Wedge Prospect. This is a seismically identified Temblor prospect located
northwest of and adjacent to the East Lost Hills deep gas discovery. During the
first fiscal quarter of 2001, we acquired approximately 17 miles of proprietary,
high effort 2D seismic data and combined this data with existing 2D seismic data
in order to refine what we interpret as the up-dip extension of the East Lost
Hills structure. Our seismic interpretation shows that the same trend at East
Lost Hills extends approximately ten miles further northwest of the East Lost
Hills Area of Mutual Interest and can be encountered as much as 3,000 feet
higher. Despite repeated attempts to facilitate drilling interest at Wedge
during 2003, no industry interest was generated sufficient to put together a
drilling partnership during the year. As a result, PYR re-evaluated its acreage
position at Wedge and made the decision to consolidate the leasehold by
releasing non-core prospect acreage in the project area. We currently control
approximately 8,500 gross and net acres here. Our approach is to sell down our
working interest to industry partners, and retain a 25% to 50% working interest
in this prospect.

     Bulldog Prospect. This project is a 2D seismically identified natural gas
and condensate prospect located adjacent to the giant Kettleman North Dome field
in the San Joaquin Basin. This prospect can be best characterized as a classic
footwall fault trap, similar to the many known footwall fault trap accumulations
that have produced significant quantities of hydrocarbons throughout the San
Joaquin basin. During 2003, we re-evaluated our acreage position at Bulldog and
consolidated the leasehold by releasing approximately 3200 non-core acres in the
project area. We currently control approximately 11,900 gross and net acres
here. We expect to sell down our working interest in this project and retain a
25% to 50% working interest in the prospect acreage.

Rocky Mountain Exploration

     Montana Foothills Project. This extensive natural gas exploration project,
located in northwestern Montana, is part of the southern Alberta basin, and has
been classified as the southern extension of the Alberta Foothills producing
province. The USGS and numerous Canadian industry sources have estimated
significant recoverable reserves for the Montana portion of the Foothills trend.
Based on extensive geologic and seismic analysis, we have identified numerous
structural culminations of similar size, geometry, and kinematic history as
prolific Canadian foothills fields, such as Waterton and Turner Valley.

                                       6

<PAGE>


     The geologic setting and hydrocarbon potential of this area was not
recognized by industry until the early 1980s. At that time, a number of
companies initiated exploration efforts, including Exxon, Arco, Chevron, Amoco,
Conoco, and Unocal. This initial exploration phase culminated in a deep test by
Unocal in 1989. Although this well was unsuccessful, recent improvements in
seismic imaging and pre-stack processing have resulted in our belief that this
test well was drilled based upon a misleading seismic image and was located
significantly off-structure.

     We currently control approximately 241,800 gross and 226,300 net acres in
this project and are currently presenting this project to potential industry
participants in order to sell down our working interest and generate exploratory
drilling activity. We anticipate retaining a small working interest or an
Overriding Royalty Interest in the project due to the high expected capital
costs of full potential development.

     Cumberland Project. The Cumberland project, located within the Overthrust
Belt of southwest Wyoming, is a gas-condensate exploration prospect in Uinta
County, Wyoming. Cumberland is at the northern end of the historically
productive Nugget trend on the hangingwall of the Absaroka thrust fault. The
prospect lies along trend of and just north of Ryckman Creek field, which was
discovered in 1975.

     The Cumberland prospect can be best characterized as a classic hangingwall
anticlinal trap, similar to the many known Nugget sandstone accumulations that
have produced significant quantities of hydrocarbons from Pineview to Ryckman
Creek. The Cumberland culmination is the result of structural deformation
related to back-thrusting off of the Absaroka thrust, a similar geometry to that
exhibited at East Painter Reservoir field.

     We currently control approximately 6,192 gross and net acres in the project
and the agreement with industry partners described above under "Cumberland
Project" pursuant to which PYR will participate in the initial test well for a
10% working interest and be carried for an additional 22.5% working interest to
casing point on the initial test well. PYR will have a 32.5% working interest in
all subsequent drilling activity, if any. We have recently received approval for
our drilling permit from the State of Wyoming and we intend to commence the
drilling of an initial exploration well during 2004.

     Mallard Project. The Mallard project, located within the Overthrust Belt of
SW Wyoming, is a sour gas and condensate exploration prospect in Uinta County,
Wyoming. Mallard is within the Paleozoic trend of productive fields on the
Absaroka thrust. Mallard directly offsets and is adjacent to the giant sour gas
field of Whitney Canyon-Carter Creek.

     We interpret the Mallard prospect to occupy a separate fault block,
adjacent to the Whitney Canyon field, generated by a complex imbricated system
of faults spaying off of the Absaroka thrust. Paleozoic targets at the Mallard
prospect include the Mississippian Mission Canyon, as well as numerous secondary
objectives in the Ordovician, Pennsylvanian, and Permian sections.

     We currently control approximately 4,159 gross and net acres in the project
and have recently signed an agreement with industry partners that provides an
option to drill to earn the Mallard Prospect after the drilling of the
Cumberland initial test well. Should the option be exercised by the
participants, PYR will retain a 5% working interest and a 23.75% carried working
interest to casing point in the initial test well at Mallard. We have recently
received approval of our drilling permit for the initial test well at Mallard
from the federal Bureau of Land Management. We intend to commence the drilling
of an initial exploration well during 2004.

Certain Definitions

     Unless otherwise indicated in this document, oil equivalents are determined
using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate
or natural gas liquids so that six Mcf of natural gas are referred to as one
barrel of oil equivalent. As used in this document, the term "Mcf" means
thousand cubic feet.

     Capital Expenditures. Costs associated with exploratory and development
drilling (including exploratory dry holes); leasehold acquisitions; seismic data
acquisitions; geological, geophysical and land related overhead expenditures;
delay rentals; producing property acquisitions; other miscellaneous capital
expenditures; compression equipment and pipeline costs.

                                       7

<PAGE>


     Carried through the tanks. The owner of this type of interest in the
drilling of a well incurs no liability for costs associated with the well until
the well is drilled, completed and connected to commercial production/processing
facilities.

     Developed Acreage. The number of acres that are allocated or assignable to
producing wells or wells capable of production.

     Development Well. A well drilled within the proved area of an oil or
natural gas reservoir to the depth of a stratigraphic horizon known to be
productive.

     Exploratory Well. A well drilled to find and produce oil or natural gas in
an unproved area, to find a new reservoir in a field previously found to be
productive of oil or natural gas in another reservoir, or to extend a known
reservoir.

     Finding and Development Costs. The total capital expenditures, including
acquisition costs, and exploration and abandonment costs, for oil and gas
activities divided by the amount of proved reserves added in the specified
period.

     Gross Acres or Gross Wells. The total acres or wells, as the case may be,
in which we have a working interest.

     Net Acres or Net Wells. A net acre or well is deemed to exist when the sum
of our fractional ownership working interests in gross acres or wells, as the
case may be, equals one. The number of net acres or wells is the sum of the
fractional working interests owned in gross acres or wells, as the case may be,
expressed as whole numbers and fractions thereof.

     Operator. The individual or company responsible to the working interest
owners for the exploration, development and production of an oil or natural gas
well or lease.

     Participant Group. The individuals and/or companies that, together,
comprise the ownership of 100% of the working interest in a specific well or
project.

     Reserves. Natural gas and crude oil, condensate and natural gas liquids on
a net revenue interest basis, found to be commercially recoverable.

     Sidetrack. An operation involving the use of a portion of an existing well
to drill a second hole at some desired angle into previously undrilled areas.
From this directional start, a new hole is drilled to the desired formation
depth and casing is set in the new hole and tied back to the casing from the
existing well.

     Undeveloped Acreage. Lease acres on which wells have not been drilled or
completed to a point that would permit the production of commercial quantities
of oil and gas regardless of whether or not such acreage contains proved
reserves.

     Working Interest. An interest in an oil and gas lease that gives the owner
of the interest the right to drill and produce oil and gas on the leased acreage
and requires the owner to pay a share of the costs of drilling and production
operations. The share of production to which a working interest owner is
entitled will always be smaller than the share of costs that the working
interest owner is required to bear, with the balance of the production accruing
to the owners of royalties.

Production and Productive Wells

     On February 6, 2001, we commenced our first production from the ELH #1 well
at East Lost Hills and this production continued throughout fiscal 2003. At
August 31, 2003, the Company had production from only the ELH #1 well. During
the fiscal year ended August 31, 2003, the Company's net share of production
from this well was 34,773 mcf of natural gas and 1,583 barrels of liquid
hydrocarbons.

                                       8

<PAGE>


Drilling Activities

     During the past three fiscal years, we participated in the drilling of the
following exploration and development wells:

     o    During the fiscal year ended August 31, 2003, we participated in the
          drilling of an exploratory well in the DJ Basin of Colorado. This
          well, which was drilled to a depth of approximately 4,800 feet was
          found to contain non-commercial deliverability of hydrocarbons and was
          plugged and abandoned.

     o    During the fiscal year ended August 31, 2002, we participated in three
          gross (0.283 net) development wells at East Lost Hills. We also
          participated in one gross (0.00 net) exploration well at the Pyramid
          Power prospect with a carried through the tanks working interest. The
          ELH #4 well reached a total depth of approximately 20,500 feet on
          November 17, 2001. The ELH #9 well reached a total depth of
          approximately 21,100 feet on April 10, 2002 and the Aera Energy LLC
          NWLH 1-22 well reached a total depth of 20,457 feet on August 16,
          2002.

     o    During the fiscal year ended August 31, 2001, we participated in the
          drilling of three gross (0.283 net) development wells, all at East
          Lost Hills. The ELH #4 well commenced drilling on November 26, 2000.
          The ELH #9 well commenced drilling on July 18, 2001, and on August 23,
          2001, the Aera Energy LLC NWLH 1-22 well commenced drilling.

     Although there is no assurance that any additional wells will be drilled,
we anticipate we may commence drilling up to four exploration wells during
fiscal 2004 on our exploration projects other than East Lost Hills. We do not
expect to participate in the drilling of any additional wells at East Lost Hills
during 2004. The actual number of wells drilled will be dependent on several
factors, including the results of our ongoing exploration efforts and the
availability of capital.

Reserves

     We commenced our first production from the ELH #1 well at East Lost Hills
on February 6, 2001. Concurrent with the end of our fiscal year ended August 31,
2001, we engaged Netherland, Sewell & Associates, Inc., independent petroleum
engineers, to prepare a reserve report for the reserves related to our ownership
interest in the East Lost Hills project. Based on this historical data of
constrained production and drilling costs affected by significant mechanical
difficulties, the reserve report concludes that it would be uneconomic to
produce oil and gas reserves at East Lost Hills. Therefore, at August 31, 2001,
the reserve report from our independent petroleum engineers shows no proved
reserves. No additional meaningful production was established during fiscal 2002
or fiscal 2003, and, accordingly, no reserve report was prepared as of the
August 31, 2002 or 2003 fiscal year ends. Previous to August 31, 2001, all of
our oil and gas properties were classified as undeveloped, and no reserve
reports were warranted.

     Reserve engineering is a subjective process of estimating underground
accumulations of oil and gas that cannot be measured in an exact way, and the
accuracy of any reserve estimate is a function of the quality of available data
and of engineering and geological interpretation and judgment and the existence
of development plans. In addition, results of drilling, testing and production
subsequent to the date of an estimate may justify revision of such estimates.
Accordingly, reserve estimates are often different from the quantities of oil
and gas that are ultimately recovered. Further, the estimated future net
revenues from proved reserves and the present value thereof are based upon
certain assumptions, including geologic success, prices, future production
levels and cost, that may not prove correct over time. Predictions about prices
and future production levels are subject to great uncertainty, and the
meaningfulness of such estimates is highly dependent upon the accuracy of the
assumptions upon which they are based.

Property Impairment

     As required for oil and gas companies that utilize the full cost method of
accounting for oil and gas activities, we capitalize all costs associated with
acquisition, exploration and development activities. Capitalized costs,
excluding costs of investments in unproved properties and major development
projects, are subject to a "ceiling test limitation." Under the ceiling test,
capitalized costs may not exceed an amount equal to the present value,
discounted at 10%, of the estimated future net cash flows from proved oil and
gas reserves. If capitalized costs exceed this ceiling, an impairment is
recognized.

     As described above under "--Reserves," we had no proved reserves as of
August 31, 2003. As a result, we are required to record an impairment against
our entire amortizable cost pool. This charge has no impact on our cash or cash
flows. For the year ended August 31, 2003, the Company incurred amortizable cost
pool charges of approximately $451,000 on its East Lost Hills project. As of
August 31, 2003, this amount, together with approximately $2,783,000 of capital

                                       9

<PAGE>


costs associated primarily with undeveloped San Joaquin Basin projects, were
charged to impairment expense. Additional discussion of the charge, including
information regarding the methodology prescribed for computing the full cost
ceiling, is presented in Note 3 to our Financial Statements in this Annual
Report on Form 10-K.

Acreage

     We currently control through lease, farmout, and option, the following
approximate acreage position as detailed below:

        State                    Gross Acres       Net Acres
        -----                    -----------       ---------
     California                    32,000           27,000
     Montana                      242,000          226,000
     Wyoming                       12,000           12,000
                                  -------          -------

     TOTAL                        286,000          265,000



Competition

     We compete with numerous companies in virtually all facets of our business,
including many companies that have significantly greater resources. These
competitors may be able to pay more for desirable leases and to evaluate, bid
for and purchase a greater number of properties than our financial or personnel
resources permit. Our ability to establish and increase reserves in the future
will be dependent on our ability to select and acquire suitable producing
properties and prospects for future exploration and development. The
availability of a market for oil and gas production depends upon numerous
factors beyond the control of producers, including but not limited to the
availability of other domestic or imported production, the locations and
capacity of pipelines, and the effect of federal and state regulation on that
production.

Government Regulation of the Oil and Gas Industry

     General. Our business is affected by numerous laws and regulations,
including energy, environmental, conservation, tax and other laws and
regulations relating to the energy industry. Failure to comply with these laws
and regulations may result in the assessment of administrative, civil and
criminal penalties, the imposition of injunctive relief or both. Moreover,
changes in any of these laws and regulations could have a material adverse
effect on our business. In view of the many uncertainties with respect to
current and future laws and regulations, including their applicability to us, we
cannot predict the overall effect of such laws and regulations on our future
operations.

     We do not currently operate any properties. We believe that operations
where we own interests comply in all material respects with applicable laws and
regulations and that the existence and enforcement of these laws and regulations
have no more restrictive an effect on our operations than on other similar
companies in the energy industry.

     The following discussion contains summaries of certain laws and regulations
and is qualified in its entirety by the foregoing and by reference to the full
text of the laws and regulations described.

     Federal Regulation of the Sale and Transportation of Oil and Gas. Various
aspects of our oil and gas operations are or will be regulated by agencies of
the federal government. The Federal Energy Regulatory Commission, or FERC,
regulates the transportation and sale for resale of natural gas in interstate
commerce pursuant to the Natural Gas Act of 1938, or NGA, and the Natural Gas
Policy Act of 1978, or NGPA. In the past, the federal government has regulated
the prices at which oil and gas could be sold. While "first sales" by producers
of natural gas, and all sales of crude oil, condensate and natural gas liquids
can currently be made at uncontrolled market prices, Congress could reenact
price controls in the future. Deregulation of wellhead sales in the natural gas
industry began with the enactment of the NGPA in 1978. In 1989, Congress enacted
the Natural Gas Wellhead Decontrol Act.

     The Decontrol Act removed all NGA and NGPA price and non-price controls
affecting wellhead sales of natural gas effective January 1, 1993.

     Commencing in April 1992, the FERC issued Order Nos. 636, 636-A, 636-B,
636-C and 636-D ("Order No. 636"), which require interstate pipelines to provide
transportation services separately, or "unbundled," from the pipelines' sales of
gas. Also, Order No. 636 requires pipelines to provide open access

                                       10

<PAGE>


transportation on a nondiscriminatory basis that is equal for all natural gas
shippers. Although Order No. 636 does not directly regulate our production
activities, the FERC has stated that it intends for Order No. 636 to foster
increased competition within all phases of the natural gas industry. It is
unclear what impact, if any, increased competition within the natural gas
industry under Order No. 636 will have on our activities.

     The courts have largely affirmed the significant features of Order No. 636
and numerous related orders pertaining to the individual pipelines, although
certain appeals remain pending and the FERC continues to review and modify their
open access regulations. In particular, the FERC is conducting a broad review of
its transportation regulations, including how they operate in conjunction with
state proposals for retail gas market restructuring, whether to eliminate
cost-of-service rates for short-term transportation, whether to allocate all
short-term capacity on the basis of competitive auctions, and whether changes to
long-term transportation policies may also be appropriate to avoid a market bias
toward short-term contracts. In February 2000, the FERC issued Order No. 637
amending certain regulations governing interstate natural gas pipeline companies
in response to the development of more competitive markets for natural gas and
natural gas transportation. The goal of Order No. 637 is to "fine tune" the open
access regulations implemented by Order No. 636 to accommodate subsequent
changes in the market. Key provisions of Order No. 637 include: (1) waiving the
price ceiling for short-term capacity release transactions until September 30,
2002, subject to review and possible extension of the program at that time; (2)
permitting value-oriented peak/off peak rates to better allocate revenue
responsibility between short-term and long-term markets; (3) permitting
term-differentiated rates, in order to better allocate risks between shippers
and the pipeline; (4) revising the regulations related to scheduling procedures,
capacity, segmentation, imbalance management, and penalties; (5) retaining the
right of first refusal ("ROFR") and the five year matching cap for long-term
shippers at maximum rates, but significantly narrowing the ROFR for customers
that the FERC does not deem to be captive; and (6) adopting new website
reporting requirements that include daily transactional data on all firm and
interruptible contracts and daily reporting of scheduled quantities at points or
segments. The new reporting requirements became effective September 1, 2000. We
cannot predict what action the FERC will take on these matters in the future,
nor can we accurately predict whether the FERC's actions will, over the long
term, achieve the goal of increasing competition in markets in which our natural
gas, once produced, is sold. However, we do not believe that we will be affected
by any action taken materially differently than other natural gas producers and
marketers with which we compete.

     Commencing in October 1993, the FERC issued a series of rules (Order Nos.
561 and 561-A) establishing an indexing system under which oil pipelines are
able to change their transportation rates, subject to prescribed ceiling levels.
The indexing system, which allows pipelines to make rate changes to track
changes in the Producer Price Index for Finished Goods, minus one percent,
became effective January 1, 1995. We do not believe that these rules affect us
any differently than other oil producers and marketers with which we will
compete.

     The FERC also has issued numerous orders confirming the sale and
abandonment of natural gas gathering facilities previously owned by interstate
pipelines and acknowledging that if the FERC does not have jurisdiction over
services provided on those facilities, then those facilities and services may be
subject to regulation by state authorities in accordance with state law. A
number of states have either enacted new laws or are considering the adequacy of
existing laws affecting gathering rates and/or services. Other state regulation
of gathering facilities generally includes various safety, environmental, and in
some circumstances, nondiscriminatory take requirements, but does not generally
entail rate regulation. Thus, natural gas gathering may receive greater
regulatory scrutiny of state agencies in the future. Our anticipated gathering
operations could be adversely affected should they be subject in the future to
increased state regulation of rates or services, although we do not believe that
we would be affected by such regulation any differently than other natural gas
producers or gatherers. In addition, the FERC's approval of transfers of
previously-regulated gathering systems to independent or pipeline affiliated
gathering companies that are not subject to FERC regulation may affect
competition for gathering or natural gas marketing services in areas served by
those systems and thus may affect both the costs and the nature of gathering
services that will be available to interested producers or shippers in the
future.

     We conduct certain operations on federal oil and gas leases, which are
administered by the Minerals Management Service, or MMS. Federal leases contain
relatively standard terms and require compliance with detailed MMS regulations
and orders, which are subject to change. Among other restrictions, the MMS has
regulations restricting the flaring or venting of natural gas, and has proposed
to amend those regulations to prohibit the flaring of liquid hydrocarbons and
oil without prior authorization. Under certain circumstances, the MMS may
require any of our operations on federal leases to be suspended or terminated.
Any such suspension or termination could materially and adversely affect our
financial condition, cash flows and operations. The MMS recently issued a final
rule that amended its regulations governing the valuation of crude oil produced
from federal leases. This new rule, which became effective June 1, 2000,
provides that the MMS will collect royalties based on the market value of oil
produced from federal leases. The lawfulness of the new rule has been challenged

                                       11

<PAGE>


in federal court. We cannot predict whether this new rule will be upheld in
federal court, nor can we predict whether the MMS will take further action on
this matter. However, we do not believe that this new rule will affect us any
differently than other producers and marketers of crude oil with which we will
compete.

     Additional proposals and proceedings that might affect the oil and gas
industry are pending before Congress, the FERC, the MMS, state commissions and
the courts. We cannot predict when or whether any such proposals may become
effective. In the past, the natural gas industry has been heavily regulated.
There is no assurance that the regulatory approach currently pursued by various
agencies will continue indefinitely. Notwithstanding the foregoing, we do not
anticipate that compliance with existing federal, state and local laws, rules
and regulations will have a material or significantly adverse effect upon our
capital expenditures, earnings or competitive position. No material portion of
our business is subject to re-negotiation of profits or termination of contracts
or subcontracts at the election of the federal government.

     State Regulation. Our operations also are subject to regulation at the
state and, in some cases, county, municipal and local governmental levels. This
regulation includes requiring permits for the drilling of wells, maintaining
bonding requirements in order to drill or operate wells and regulating the
location of wells, the method of drilling and casing wells, the surface use and
restoration of properties upon which wells are drilled, the plugging and
abandonment of wells and the disposal of fluids used and produced in connection
with operations. Our operations also are or will be subject to various
conservation laws and regulations. These include (1) the size of drilling and
spacing units or proration units, (2) the density of wells that may be drilled,
and (3) the unitization or pooling of oil and gas properties. In addition, state
conservation laws, which frequently establish maximum rates of production from
oil and gas wells, generally prohibit the venting or flaring of gas and impose
certain requirements regarding the ratability of production. State regulation of
gathering facilities generally includes various safety, environmental and, in
some circumstances, nondiscriminatory take requirements, but (except as noted
above) does not generally entail rate regulation. These regulatory burdens may
affect profitability, but we are unable to predict the future cost or impact of
complying with such regulations. Further, pursuant to a 1996 law passed by the
California State Assembly, certain segments of the power generation industry in
the state were deregulated. Toward the end of calendar 2000, this statute, along
with the significantly increased demand for natural gas, the increased price of
natural gas and other fuels, and the overall increase in the demand for and cost
of power generation had created a major crisis in California. The crisis
threatened to bankrupt many electric utilities because of state-imposed limits
on the ability to pass costs through to the utilities' customers. Because of a
general decline in demand for natural gas, the build up of natural gas in
storage and the resulting decrease in natural gas prices, the energy crisis in
California does not currently exist. However, because natural gas-driven
turbines generate a substantial portion of California's electricity supply, it
is possible that laws or regulations imposed at the state or federal level
intended to alleviate a potential future crisis would have a material adverse
impact on natural gas prices, marketing activities, operations or production.

     Environmental Matters. Operations on properties in which we have an
interest are subject to extensive federal, state and local environmental laws
that regulate the discharge or disposal of materials or substances into the
environment and otherwise are intended to protect the environment. Numerous
governmental agencies issue rules and regulations to implement and enforce such
laws, which are often difficult and costly to comply with and which carry
substantial administrative, civil and criminal penalties and in some cases
injunctive relief for failure to comply. Some laws, rules and regulations
relating to the protection of the environment may, in certain circumstances,
impose "strict liability" for environmental contamination. These laws render a
person or company liable for environmental and natural resource damages, cleanup
costs and, in the case of oil spills in certain states, consequential damages
without regard to negligence or fault. Other laws, rules and regulations may
require the rate of oil and gas production to be below the economically optimal
rate or may even prohibit exploration or production activities in
environmentally sensitive areas. In addition, state laws often require some form
of remedial action, such as closure of inactive pits and plugging of abandoned
wells, to prevent pollution from former or suspended operations. Legislation has
been proposed in the past and continues to be evaluated in Congress from time to
time that would reclassify certain oil and gas exploration and production wastes
as "hazardous wastes." This reclassification would make these wastes subject to
much more stringent storage, treatment, disposal and clean-up requirements,
which could have a significant adverse impact on operating costs. Initiatives to
further regulate the disposal of oil and gas wastes are also proposed in certain
states from time to time and may include initiatives at the county, municipal
and local government levels. These various initiatives could have a similar
adverse impact on operating costs. The regulatory burden of environmental laws
and regulations increases our cost and risk of doing business and consequently
affects our profitability.

     The federal Comprehensive Environmental Response, Compensation and
Liability Act, or CERCLA, also known as the "Superfund" law, imposes liability,
without regard to fault, on certain classes of persons with respect to the
release of a "hazardous substance" into the environment. These persons include
the current or prior owner or operator of the disposal site or sites where the

                                       12

<PAGE>


release occurred and companies that transported, disposed or arranged for the
transport or disposal of the hazardous substances found at the site. Persons who
are or were responsible for releases of hazardous substances under CERCLA may be
subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment and for
damages to natural resources, and it is not uncommon for the federal or state
government to pursue such claims. It is also not uncommon for neighboring
landowners and other third parties to file claims for personal injury or
property or natural resource damages allegedly caused by the hazardous
substances released into the environment. Under CERCLA, certain oil and gas
materials and products are, by definition, excluded from the term "hazardous
substances." At least two federal courts have held that certain wastes
associated with the production of crude oil may be classified as hazardous
substances under CERCLA. Similarly, under the federal Resource, Conservation and
Recovery Act, or RCRA, which governs the generation, treatment, storage and
disposal of "solid wastes" and "hazardous wastes," certain oil and gas materials
and wastes are exempt from the definition of "hazardous wastes." This exemption
continues to be subject to judicial interpretation and increasingly stringent
state interpretation. During the normal course of operations on properties in
which we have an interest, exempt and non-exempt wastes, including hazardous
wastes, that are subject to RCRA and comparable state statutes and implementing
regulations are generated or have been generated in the past. The federal
Environmental Protection Agency and various state agencies continue to
promulgate regulations that limit the disposal and permitting options for
certain hazardous and non-hazardous wastes.

     Our operations will involve the use of gas fired compressors to transport
collected gas. These compressors are subject to federal and state regulations
for the control of air emissions. Title V status for a facility results in
significant increased testing, monitoring and administrative and compliance
costs. To date, other compressor facilities have not triggered Title V
requirements due to the design of the facility and the use of state-of-the-art
engines and pollution control equipment that serve to reduce air emissions.
However, in the future, additional facilities could become subject to Title V
requirements as compressor facilities are expanded or if regulatory
interpretations of Title V applicability change. Stack testing and emissions
monitoring costs will grow as these facilities are expanded and if they trigger
Title V. We believe that the operator of the properties in which we have an
interest is in substantial compliance with applicable laws, rules and
regulations relating to the control of air emissions at all facilities on those
properties.

     Although we maintain insurance against some, but not all, of the risks
described above, including insuring the costs of clean-up operations, public
liability and physical damage, there is no assurance that our insurance will be
adequate to cover all such costs, that the insurance will continue to be
available in the future or that the insurance will be available at premium
levels that justify our purchase. The occurrence of a significant event not
fully insured or indemnified against could have a material adverse effect on our
financial condition and operations.

     Compliance with environmental requirements, including financial assurance
requirements and the costs associated with the cleanup of any spill, could have
a material adverse effect on our capital expenditures, earnings or competitive
position. We do believe, however, that our operators are in substantial
compliance with current applicable environmental laws and regulations.
Nevertheless, changes in environmental laws have the potential to adversely
affect operations. At this time, we have no plans to make any material capital
expenditures for environmental control facilities.

Title to Properties

     As is customary in the oil and gas industry, only a preliminary title
examination is conducted at the time we acquire leases or enter into other
agreements to obtain control over interests in acreage believed to be suitable
for drilling operations. In many instances, our partners have acquired rights to
the prospective acreage and we have a contractual right to have our interests in
that acreage assigned to us. In some cases, we are in the process of having
those interests so assigned. Prior to the commencement of drilling operations, a
thorough title examination of the drill site tract is conducted by independent
attorneys. Once production from a given well is established, the operator will
prepare a division order title report indicating the proper parties and
percentages for payment of production proceeds, including royalties. We believe
that titles to our leasehold properties are good and defensible in accordance
with standards generally acceptable in the oil and gas industry.

Risk Factors

     In evaluating the Company, careful consideration should be given to the
following risk factors, in addition to the other information included or
incorporated by reference in this annual report. In addition, the
"Forward-Looking Statements" located herein, describe additional uncertainties
associated with our business and the forward-looking statements included or
incorporated by reference. Each of these risk factors could adversely affect our
business, operating results and financial condition, as well as adversely affect
the value of an investment in our common stock.

                                       13

<PAGE>


     We have a limited operating history in the oil and gas business. Our
operations to date have consisted solely of evaluating geological and
geophysical information, acquiring acreage positions, generating exploration
prospects, and drilling a limited number of wells on deep oil and gas prospects.
We currently have five full-time employees. Our future financial results depend
primarily on (1) our ability to discover commercial quantities of oil and gas;
(2) the market price for oil and gas; (3) our ability to continue to generate
potential exploration prospects; and (4) our ability to fully implement our
exploration and development program. We cannot predict that our future
operations will be profitable. In addition, our operating results may vary
significantly during any financial period. These variations may be caused by
significant periods of time between discovery and development of oil or gas
reserves, if any, in commercial quantities.

     Our ongoing overhead exceeds our incoming revenue and our cash resources
are not unlimited. We need to increase our sources of revenue and/or funding in
order to sustain operations for the long run. There is no assurance that this
will occur.

     We may not discover commercially productive reserves. Our future success
depends on our ability to economically locate oil and gas reserves in commercial
quantities. Except to the extent that we acquire properties containing proved
reserves or that we conduct successful exploration and development activities,
or both, our proved reserves, if any, will decline as reserves are produced. Our
ability to locate reserves is dependent upon a number of factors, including our
participation in multiple exploration projects and our technological capability
to locate oil and gas in commercial quantities. We cannot predict that we will
have the opportunity to participate in projects that economically produce
commercial quantities of oil and gas in amounts necessary to meet our business
plan or that the projects in which we elect to participate will be successful.
There can be no assurance that our planned projects will result in significant
reserves or that we will have future success in drilling productive wells at
economical reserve replacement costs.

     Exploratory drilling is an uncertain process with many risks. Exploratory
drilling involves numerous risks, including the risk that we will not find any
commercially productive oil or gas reservoirs. The cost of drilling, completing
and operating wells is often uncertain, and a number of factors can delay or
prevent drilling operations, including:

     o    unexpected drilling conditions,
     o    pressure or irregularities in formations,
     o    equipment failures or accidents,
     o    adverse weather conditions,
     o    compliance with governmental requirements,
     o    shortages or delays in the availability of drilling rigs and the
          delivery of equipment, and
     o    shortages of trained oilfield service personnel.

     Our future drilling activities may not be successful, nor can we be sure
that our overall drilling success rate or our drilling success rate for
activities within a particular area will not decline. Unsuccessful drilling
activities could have a material adverse effect on our results of operations and
financial condition. Also, we may not be able to obtain any options or lease
rights in potential drilling locations that we identify. Although we have
identified a number of potential exploration projects, we cannot be sure that we
will ever drill them or that we will produce oil or gas from them or any other
potential exploration projects.

     Our exploration and development activities are subject to reservoir and
operational risks. Even when oil and gas is found in what is believed to be
commercial quantities, reservoir risks, which may be heightened in new
discoveries, may lead to increased costs and decreased production. These risks
include the inability to sustain deliverability at commercially productive
levels as a result of decreased reservoir pressures, large amounts of water, or
other factors that might be encountered. As a result of these types of risks,
most lenders will not loan funds secured by reserves from newly discovered
reservoirs, which would have a negative impact on our future liquidity.
Operational risks include hazards such as fires, explosions, craterings,
blowouts (such as the blowout experienced at our initial exploratory well),
uncontrollable flows of oil, gas or well fluids, pollution, releases of toxic
gas and encountering formations with abnormal pressures. In addition, we may be
liable for environmental damage caused by previous owners of property we own or
lease. As a result, we may face substantial liabilities to third parties or
governmental entities, which could reduce or eliminate funds available for
exploration, development or acquisitions or cause us to incur substantial
losses.

     We expect to maintain insurance against some, but not all, of the risks
associated with drilling and production in amounts that we believe to be
reasonable in accordance with customary industry practices. The occurrence of a
significant event, however, that is not fully insured could have a material
adverse effect on our financial condition and results of operations.

     Our operations require large amounts of capital. Our current development
plans will require us to make large capital expenditures for the exploration and
development of our oil and gas projects. Under our current capital expenditure

                                       14

<PAGE>


budget, we expect to spend a minimum of approximately $900,000 on exploration
and development activities during our fiscal year ending August 31, 2004. Also,
we must secure substantial capital to explore and develop our other potential
projects. Historically, we have funded our capital expenditures through the
issuance of equity. Volatility in the price of our common stock, which may be
significantly influenced by our drilling and production activity, may impede our
ability to raise money quickly, if at all, through the issuance of equity at
acceptable prices. We currently do not have any sources of additional financing.
Future cash flows and the availability of financing will be subject to a number
of variables, such as:

     o    our success in locating and producing reserves in other projects,
     o    the level of production from existing wells, and
     o    prices of oil and gas.

     Issuing equity securities to satisfy our financing requirements could cause
substantial dilution to our existing stockholders. Debt financing, if obtained,
could lead to:

     o    a substantial portion of our operating cash flow being dedicated to
          the payment of principal and interest,
     o    our being more vulnerable to competitive pressures and economic
          downturns, and
     o    restrictions on our operations.

     If our revenues were to decrease due to lower oil and gas prices, decreased
production or other reasons, and if we could not obtain capital through a credit
facility or otherwise, our ability to execute our development plans, obtain and
replace reserves, or maintain production levels could be greatly limited.

     We depend heavily on exploration success and subsequent success in
developing our exploration projects. Our future growth plans rely heavily on
discovering reserves and initiating production in the San Joaquin Basin and in
the Rocky Mountains. This lack of diverse business operations subjects us to a
high degree of risk.

     Our development plan includes the need to discover reserves and establish
commercial production through exploratory drilling and development of our
existing properties. We cannot be sure, though, that our planned projects will
lead to significant reserves that can be economically extracted or that we will
be able to drill productive wells at anticipated finding and development costs.
If we are able to record reserves, our reserves will decline as they are
depleted, except to the extent that we conduct successful exploration or
development activities or acquire other properties containing proved reserves.

     We depend on industry alliances. We attempt to limit financial exposure on
a project-by-project basis by forming industry alliances where our technical
expertise can be complemented with the financial resources and operating
expertise of more established companies. While entering into these alliances
limits our financial exposure, it also limits our potential revenue from
successful projects. Industry alliances also have the potential to expose us to
uncertainty if our industry partners are acquired or have priorities in areas
other than our projects. Despite these risks, we believe that if we are not able
to form industry alliances, our ability to fully implement our business plan
could be limited, which could have a material adverse effect on our business.

     Our non-operator status limits our control over our oil and gas projects.
We focus primarily on creating exploration opportunities and forming industry
alliances to develop those opportunities. As a result, we have only a limited
ability to exercise control over a significant portion of a project's operations
or the associated costs of those operations. The success of a project is
dependent upon a number of factors that are outside our areas of expertise and
control. These factors include:

     o    the availability of leases with favorable terms and the availability
          of required permitting for projects,
     o    the availability of future capital resources to us and the other
          participants to be used for purchasing leases and drilling wells,
     o    the approval of other participants for the purchasing of leases and
          the drilling of wells on the projects, and
     o    the economic conditions at the time of drilling, including the
          prevailing and anticipated prices for oil and gas.

     Our reliance on other project participants and our limited ability to
directly control project costs could have a material adverse effect on our
expected rates of return.

                                       15

<PAGE>


     Oil and gas prices are volatile and an extended decline in prices could
hurt our business prospects. Our future profitability and rate of growth and the
anticipated carrying value of our oil and gas properties will depend heavily on
then prevailing market prices for oil and gas. We expect the markets for oil and
gas to continue to be volatile. If we are successful in continuing to establish
production, any substantial or extended decline in the price of oil or gas
could:

     o    have a material adverse effect on our results of operations,
     o    limit our ability to attract capital,
     o    make the formations we are targeting significantly less economically
          attractive,
     o    reduce our cash flow and borrowing capacity, and
     o    reduce the value and the amount of any future reserves.

Various factors beyond our control will affect prices of oil and gas, including:

     o    worldwide and domestic supplies of oil and gas,
     o    the ability of the members of the Organization of Petroleum Exporting
          Countries to agree to and maintain oil price and production controls,
     o    political instability or armed conflict in oil or gas producing
          regions,
     o    the price and level of foreign imports,
     o    worldwide economic conditions,
     o    marketability of production,
     o    the level of consumer demand,
     o    the price, availability and acceptance of alternative fuels,
     o    the availability of processing and pipeline capacity,
     o    weather conditions, and
     o    actions of federal, state, local and foreign authorities.

     These external factors and the volatile nature of the energy markets make
it difficult to estimate future prices of oil and gas. In addition, sales of oil
and gas are seasonal in nature, leading to substantial differences in cash flow
at various times throughout the year.

     Accounting rules may require write-downs. Under full cost accounting rules,
capitalized costs of proved oil and gas properties may not exceed the present
value of estimated future net revenues from proved reserves, discounted at 10%.
Application of the ceiling test generally requires pricing future revenue at the
unescalated prices in effect as of the end of each fiscal quarter and requires a
write-down for accounting purposes if the ceiling is exceeded. If a write-down
is required, it would result in a charge to earnings, but would not impact cash
flow from operating activities. Once incurred, a write-down of oil and gas
properties is not reversible at a later date. We commenced our first oil and gas
production on February 6, 2001, resulting in a change of classification of a
component of our capitalized oil and gas properties from undeveloped to
developed. We engaged an independent engineering firm to conduct a reserve
analysis and to prepare a reserve report for the East Lost Hills project. This
report reflected no economic reserves at our fiscal year ended August 31, 2001.
As a result, we recorded a write-down of approximately $13,340,000 to reduce the
carrying value of our oil and gas properties. No additional meaningful
production was established during our fiscal years ended August 31, 2002 or
2003, and we recorded additional impairments of $11,723,000 and $3,234,000,
respectively, against our oil and gas properties. Additional discussion of this
charge is presented in Note 1 to our Financial Statements in this Annual Report
on Form 10-K.

     We face risks related to title to the leases we enter into that may result
in additional costs and affect our operating results. It is customary in the oil
and gas industry to acquire a leasehold interest in a property based upon a
preliminary title investigation. In many instances, our partners have acquired
rights to the prospective acreage and we have a contractual right to have our
interests in that acreage assigned to us. In some cases, we are in the process
of having those interests so assigned. If the title to the leases acquired is
defective, or title to the leases one of our partners acquires for our benefit
is defective, we could lose the money already spent on acquisition and
development, or incur substantial costs to cure the title defect, including any
necessary litigation. If a title defect cannot be cured or if one of our
partners does not assign to us our interest in a lease acquired for our benefit,
we will not have the right to participate in the development of or production
from the leased properties. In addition, it is possible that the terms of our
oil and gas leases may be interpreted differently depending on the state in
which the property is located. For instance, royalty calculations can be
substantially different from state to state, depending on each state's
interpretation of lease language concerning the costs of production. We cannot

                                       16

<PAGE>


guarantee that there will be no litigation concerning the proper interpretation
of the terms of our leases. Adverse decisions in any litigation of this kind
could result in material costs or the loss of one or more leases.

     Our industry is highly competitive and many of our competitors have more
resources than we do. We compete in oil and gas exploration with a number of
other companies. Many of these competitors have financial and technological
resources vastly exceeding those available to us. We cannot be sure that we will
be successful in acquiring and developing profitable properties in the face of
this competition. In addition, from time to time, there may be competition for,
and shortage of, exploration, drilling and production equipment. These shortages
could lead to an increase in costs and delays in operations that could have a
material adverse effect on our business and our ability to develop our
properties. Problems of this nature also could prevent us from producing any oil
and gas we discover at the rate we desire to do so.

     Technological changes could put us at a competitive disadvantage. The oil
and gas industry is characterized by rapid and significant technological
advancements and introductions of new products and services using new
technologies. As new technologies develop, we may be placed at a competitive
disadvantage, and competitive pressures may force us to implement those new
technologies at a substantial cost. If other oil and gas exploration and
development companies implement new technologies before we do, those companies
may be able to provide enhanced capabilities and superior quality compared with
what we are able to provide. We may not be able to respond to these competitive
pressures and implement new technologies on a timely basis or at an acceptable
cost. If we are unable to utilize the most advanced commercially available
technologies, our business could be materially and adversely affected.

     Our industry is heavily regulated. Federal, state and local authorities
extensively regulate the oil and gas industry. Legislation and regulations
affecting the industry are under constant review for amendment or expansion,
raising the possibility of changes that may affect, among other things, the
pricing or marketing of oil and gas production. State and local authorities
regulate various aspects of oil and gas drilling and production activities,
including the drilling of wells (through permit and bonding requirements), the
spacing of wells, the unitization or pooling of oil and gas properties,
environmental matters, safety standards, the sharing of markets, production
limitations, plugging and abandonment, and restoration. The overall regulatory
burden on the industry increases the cost of doing business, which, in turn,
decreases profitability.

     Our operations must comply with complex environmental regulations. Our
operations are subject to complex and constantly changing environmental laws and
regulations adopted by federal, state and local governmental authorities. New
laws or regulations, or changes to current requirements, could have a material
adverse effect on our business. We will continue to be subject to uncertainty
associated with new regulatory interpretations and inconsistent interpretations
between state and federal agencies. We could face significant liabilities to the
government and third parties for discharges of oil, natural gas, produced water
or other pollutants into the air, soil or water, and we could have to spend
substantial amounts on investigations, litigation and remediation. We cannot be
sure that existing environmental laws or regulations, as currently interpreted
or enforced, or as they may be interpreted, enforced or altered in the future,
will not have a material adverse effect on our results of operations and
financial condition.

     Our business depends on transportation facilities owned by others. The
marketability of our anticipated gas production depends in part on the
availability, proximity and capacity of pipeline systems owned or operated by
third parties. Federal and state regulation of oil and gas production and
transportation, tax and energy policies, changes in supply and demand and
general economic conditions could adversely affect our ability to produce,
gather and transport oil and natural gas.

     Attempts to grow our business could have an adverse effect. Because of our
small size, we desire to grow rapidly in order to achieve certain economies of
scale. Although there is no assurance that this rapid growth will occur, to the
extent that it does occur, it will place a significant strain on our financial,
technical, operational and administrative resources. As we increase our services
and enlarge the number of projects we are evaluating or in which we are
participating, there will be additional demands on our financial, technical and
administrative resources. The failure to continue to upgrade our technical,
administrative, operating and financial control systems or the occurrence of
unexpected expansion difficulties, including the recruitment and retention of
geoscientists and engineers, could have a material adverse effect on our
business, financial condition and results of operations.

     We may not be able to retain our listing on the American Stock Exchange.
The American Stock Exchange has certain listing requirements in order for a
company to continue to have their securities traded on this exchange. Although
the American Stock Exchange does not identify a specific minimum price per share
that a company's stock must trade above, a company may risk delisting if their
common stock trades at a low price per share for a substantial period of time.

                                       17

<PAGE>


We have not been notified of any listing concerns by the American Stock
Exchange. However, should our stock trade at a low share price for a substantial
period of time, we may not be able to retain our listing.

     We depend on key personnel. We are highly dependent on the services of D.
Scott Singdahlsen, our President and Chief Executive Officer, and our other
geological and geophysical staff members. The loss of the services of any of
these persons could hurt our business. We do not have an employment contract
with Mr. Singdahlsen or any other employee.

Disclosure Regarding Forward-Looking Statements And Cautionary Statements

     This annual report contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding, among other items, our
business and growth strategies, anticipated trends in our business and our
future results of operations, market conditions in the oil and gas industry, our
ability to make and integrate acquisitions, the outcome of litigation, if any,
and the impact of governmental regulation. These forward-looking statements are
based largely on our expectations and are subject to a number of risks and
uncertainties, many of which are beyond our control. Actual results could differ
materially from these forward-looking statements as a result of, among other
things:

     o    failure to obtain, or a decline in, oil or gas production, or a
          decline in oil or gas prices,
     o    incorrect estimates of required capital expenditures,
     o    increases in the cost of drilling, completion and gas collection or
          other costs of production and operations,
     o    an inability to meet growth projections, and
     o    other risk factors set forth under "Risk Factors" in this annual
          report. In addition, the words "believe," "may," "could," "will,"
          "when," "estimate," "continue," "anticipate," "intend," "expect" and
          similar expressions, as they relate to PYR, our business or our
          management, are intended to identify forward-looking statements.

ITEM 3. LEGAL PROCEEDINGS

     The Company is not a party to any other current or pending legal proceeding
(nor are any of the Company's properties subject to a pending legal proceeding).

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended August 31, 2003.

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market For Common Equity

     Our common stock has been listed on the American Stock Exchange under the
market symbol "PYR" since December 8, 1999. Before then it was included for
quotation on the OTC Bulletin Board under the symbol "PYRX." The following table
sets forth the range of high and low sales prices per share of our common stock
for the periods indicated.

                                                           High          Low
                                                           ----          ---
Fiscal Year Ended August 31, 2002
      First Quarter..........................             $2.830       $1.500
      Second Quarter.........................              2.700        1.800
      Third Quarter..........................              2.250        1.150
      Fourth Quarter.........................              2.350        0.700
Fiscal Year Ended August 31, 2003
      First Quarter..........................             $1.00        $0.43
      Second Quarter.........................              0.42         0.22
      Third Quarter..........................              0.68         0.25
      Fourth Quarter.........................              0.82         0.36

                                       18

<PAGE>


     On December 11, 2003, the last reported sales price of our common stock on
the American Stock Exchange was $0.83 per share.

Stockholders Of Record

     As of December 11, 2003, the number of record holders of our common stock
was approximately 571.

Dividends

     We have not declared or paid, and do not anticipate declaring or paying in
the near future, any dividends on our common stock.

Recent Sales Of Unregistered Securities; Use Of Proceeds From Registered
Securities

     On May 24, 2002, we received $6 million in gross proceeds from the sale of
convertible notes due May 24, 2009. These notes call for semi-annual interest
payments at an annual rate of 4.99% and are convertible into shares of common
stock at a conversion price of $1.30 per share. The interest can be paid in cash
or added to the principal amount at the discretion of the Company. The notes
were issued to three investment funds pursuant to exemptions from registration
under Section 3(b) and/or 4(2) of the Securities Act of 1933, as amended.
Proceeds from the notes will be used for capital expenditures related to our oil
and gas activities, for administrative costs and for other related costs.

<TABLE>
<CAPTION>


Equity Compensation Plan Information

                                           Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------------
                                                                                                   Number of Securities
                                                                                                  Remaining Available for
                                                                                                   Future Issuance under
                                    Number of Securities to be                                      Equity Compensation
                                      Issued Upon Exercise of      Weighted-Average Exercise         Plans (Excluding
                                       Outstanding Options,      Price of Outstanding Options,    Securities Reflected in
          Plan Category                 Warrants and Rights           Warrants and Rights              Column (a))*
          -------------             --------------------------   ----------------------------     ------------------------
                                                (a)                           (b)                           (c)
<S>                                     <C>                         <C>                                <C>
Equity compensation plans
approved by security holders                 2,216,500                       $2.07                          -0-

Equity compensation plans not
approved by security holders                    -0-                            --                           -0-

Total                                        2,216,500                                                      -0-
</TABLE>

-------------------
* At August 31, 2003

                                       19

<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth certain selected financial data of the
Company for each of the last five fiscal years ended August 31:
<TABLE>
<CAPTION>


                                                                         Fiscal Year Ended August 31,
                                                  ----------------------------------------------------------------------
                                                    2003            2002            2001           2000          1999
                                                  ---------      ----------     -----------     ----------     ---------
<S>                                                <C>            <C>           <C>              <C>           <C>
Operating Revenues                                 $195,167       $ 132,569     $ 1,624,096      $ 165,411     $ 116,713
Net (loss) from operations                       (4,639,501)    (13,192,579)     (3,564,408)      (982,547)   (1,140,407)
Net income (loss) per share                            (.22)           (.55)           (.59)          (.07)         (.11)
Total assets at the end of each period            9,089,904      13,400,250      22,067,184     19,942,090    10,762,521
Long-term debt at the end of each period          6,303,975       6,000,000             -0-            -0-         1,062
</TABLE>


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

     The following discussion should be read in conjunction with the Financial
Statements and Notes thereto referred to in "Item 8. Financial Statements and
Supplemental Data," and "Items 1. and 2. Business and Properties - Disclosures
Regarding Forward-Looking Statements" of this Form 10-K.

Overview

     We are a development stage independent oil and gas exploration company
whose strategic focus is the application of advanced seismic imaging and
computer aided exploration technologies in the systematic search for commercial
hydrocarbon reserves, primarily in the onshore western United States. We attempt
to leverage our technical experience and expertise with seismic data to identify
exploration and exploitation projects with significant potential economic
return. We intend to participate in selected exploration projects as a working
interest owner, currently as a non-operator, sharing both risk and rewards with
our partners. Our financial results depend on our ability to sell prospect
interests to outside industry participants. We will not be able to commence
exploratory drilling operations without outside industry participation. We have
pursued, and will continue to pursue, exploration opportunities in regions where
we believe significant opportunity for discovery of oil and gas exists. By
attempting to reduce drilling risk through seismic technology, we seek to
improve the expected return on investment in our oil and gas exploration
projects.

     Our future financial results continue to depend primarily on (1) our
ability to discover commercial quantities of hydrocarbons; (2) the market price
for oil and gas; (3) our ability to continue to source and screen potential
projects; and (4) our ability to fully implement our exploration and development
program with respect to these and other matters. There can be no assurance that
we will be successful in any of these respects or that the prices of oil and gas
prevailing at the time of production will be at a level allowing for profitable
production.

Liquidity and Capital Resources

     At August 31, 2003, we had approximately $2,667,470 in working capital.

     During the year ended August 31, 2003, our capitalized costs for oil and
gas properties decreased by approximately $1,484,000. The decrease is the result
of an impairment taken against our oil and gas properties in the amount of
$3,234,000 during the year, net of approximately $1,474,000 of costs incurred
for drilling and completion, geological and geophysical costs, delay rentals and
other related direct costs with respect to our exploration and development
projects, and net asset retirement obligation assets of approximately $276,000.

     During the fiscal year ended August 31, 2002, our capitalized costs for oil
and gas properties decreased by approximately $4,206,000. The decrease is the
result of an impairment taken against our oil and gas properties in the amount

                                       20

<PAGE>


of $11,723,000 and $250,000 in seismic sales credited to the full cost pool
during the fiscal year ended August 31, 2002. The decrease was offset by
approximately $7,767,000 of costs incurred for drilling and completion,
geological and geophysical costs, delay rentals, and other related direct costs
with respect to our exploration and development projects.

     During the fiscal year ended August 31, 2001, our capitalized costs for oil
and gas properties decreased by approximately $316,000. The decrease is the
result of an impairment taken against our oil and gas properties in the amount
of $13,340,000, offset by approximately $13,024,000 of costs incurred for
drilling and completion, the cost of acquiring an additional 1.5433% working
interest in our East Lost Hills project, transportation pipeline costs,
production facilities costs, delay rentals, and other related direct costs with
respect to our exploration and development projects.

     During the quarter ended November 30, 2000, the holders of our Series A
Convertible Preferred Stock converted all of the remaining outstanding shares of
Series A Convertible Preferred Stock into shares of common stock at a conversion
price of $.60 per share. This resulted in a cashless transaction whereby 14,263
shares of Series A Convertible Preferred Stock were converted into a total of
2,377,234 shares of common stock. At November 30, 2000, there were no remaining
shares of Series A Convertible Preferred Stock outstanding. In November 2000,
warrants to purchase 100,000 shares of common stock issued in connection with
the private placement of the Series A Convertible Preferred Stock were exercised
at the exercise price of $0.75 per share. In December 2000, warrants to purchase
an additional 16,667 shares of common stock were exercised. We received $87,500
in cash as the result of these exercises. There are no additional outstanding
warrants associated with this private placement.

     During the quarter ended November 30, 2000, warrants issued in conjunction
with a private placement that was completed in May 1999 were exercised to
purchase a total of 17,125 shares of our common stock at a purchase price of
$2.50 per share. Total proceeds received from this warrant exercise were
$42,813. Previously during the fiscal year ended August 31, 2000, warrants
issued in the May 1999 private placement had been exercised to purchase a total
of 164,063 shares of our common stock for total proceeds of $410,157. During
December 2000, all the remaining outstanding warrants from the May 1999 private
placement were exercised to purchase an aggregate of 256,312 shares of common
stock, resulting in aggregate proceeds to us of $640,781.

     During November 2000 and January 2001, warrants issued in conjunction with
the August 2000 private placement were exercised to purchase 144,286 shares of
common stock at an exercise price of $4.80 per share. This resulted in proceeds
to us of $692,573.

     During January 2001, the holders of the remaining outstanding warrants
issued in connection with a private placement that was completed in May 2000
exercised their warrants to purchase an aggregate of 22,000 shares of common
stock for $93,500.

     On March 12, 2001, we received an aggregate $11,600,000 in gross proceeds
through the sale of 1,450,000 shares of our common stock. The common stock was
sold pursuant to a shelf registration statement and prospectus supplement. After
costs and expenses, we received a net of $11,440,000. Investors consisted of a
total of ten separate funds managed by four California based institutions.

     In May 2002, we received $6,000,000 in gross proceeds from the sale of
convertible notes which resulted in long term debt of $6,000,000 at August 31,
2002. We had no outstanding long-term debt at August 31, 2001. We have not
entered into any commodity swap arrangements or hedging transactions. Although
we have no current plans to do so, we may enter into commodity swap and hedging
transactions in the future in conjunction with oil and gas production.

     It is anticipated that the continuation and future development of our
business will require additional, and possibly substantial, capital
expenditures. At this time, our ongoing administrative and operating overhead
exceeds our incoming revenue, and we have no reliable source for additional
funds for administration and operations to the extent our existing funds have
been utilized. In addition, our capital expenditure budget for the fiscal year
ending August 31, 2004 will depend on our success in selling additional
prospects for cash, the level of industry participation in our exploration
projects, the availability of debt or equity financing, and the results of our
activities, including continuing results at our East Lost Hills project. We
anticipate spending a minimum of approximately $900,000 for capital expenditures
relating to our existing drilling commitments and related development expenses,
and other exploration costs. To limit capital expenditures, we intend to form
industry alliances and exchange an appropriate portion of our interest for cash
and/or a carried interest in our exploration projects. We may need to raise
additional funds to cover capital expenditures. These funds may come from cash
flow, equity or debt financings, a credit facility, or sales of interests in our
properties, although there is no assurance additional funding will be available.

                                       21

<PAGE>


Capital Expenditures

     During fiscal 2003, we incurred approximately $451,000 of capital costs
relating to our East Lost Hills Project. We incurred approximately $1,023,000
for costs related to our other exploration projects including continued acreage
lease obligations and associated geological and geophysical costs. Revenues from
oil and gas production during 2003 were $195,000.

     During fiscal 2002, we incurred approximately $5,825,000 for costs relating
to drilling and completing wells at our East Lost Hills Project. We incurred
approximately $1,942,000 for costs related to our other exploration projects
including continued acreage lease obligations and associated geological and
geophysical costs. Revenues from oil and gas production during 2002 were
$132,569.

     During fiscal 2001, we incurred approximately $10,922,000 for costs
relating to drilling and completing wells at our East Lost Hills Project, and
for acquiring an additional 1.554% working interest at East Lost Hills. We
incurred approximately $2,102,000 for costs related to our other exploration
projects including continued leasing and optioning of acreage. We generated
$1,201,979 in revenues from oil and gas production during 2001.

     During fiscal 2000, we incurred approximately $1,319,000 for costs related
to continued leasing and optioning of acreage and approximately $4,038,000 for
drilling and seismic costs associated with deep exploratory drilling at our East
Lost Hills project. We had no revenues from oil and gas production during 2000.

     We currently anticipate that we will participate in the drilling of up to
three exploration wells during our fiscal year ending August 31, 2004, although
the number of wells may increase as additional projects are added to our
portfolio. However, there can be no assurance that any such wells will be
drilled and if drilled that any of these wells will be successful.

     Our future financial results continue to depend primarily on (1) our
ability to discover commercial quantities of hydrocarbons; (2) the market price
for oil and gas; (3) our ability to continue to source and screen potential
projects; and (4) our ability to fully implement our exploration and development
program with respect to these and other matters. There can be no assurance that
we will be successful in any of these respects or that the prices of oil and gas
prevailing at the time of production will be at a level allowing for profitable
production.

     The following table summarizes the Company's obligations and commitments to
make future payments under its convertible notes payable and office lease for
the periods specified as of August 31, 2003:

<TABLE>
<CAPTION>


---------------------- --------------------------------------------------------------------------------------------------------
                                                               Payments Due By Period
                                                               ----------------------
---------------------- --------------------------------------------------------------------------------------------------------
Contractual                                     Year Ended          Fiscal Years         Fiscal Years          Fiscal Year
----------------------                          ----------          ------------         ------------          -----------
Obligations                   Total           August 31, 2004         2005-2007            2008-2009         2010 and After
-----------                   -----           ---------------         ---------            ---------         --------------
---------------------- -------------------- -------------------- -------------------- -------------------- --------------------
<S>                             <C>                        <C>                  <C>            <C>                  <C>
Convertible Notes               $8,474,313                 $-0-                 $-0-           $8,474,313           $-0-
---------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Office Lease                        97,723               97,723                  -0-                  -0-           $-0-
------------                     ---------               ------                 -----          ----------           ----
---------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Contractual               $8,572,036              $97,723                  -0-           $8,474,313                 $-0-
Cash Obligations
---------------------- -------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>


The above schedule assumes convertible note interest payments will be added to
the principal amount (which is at the discretion of the Company), and the entire
balance will be paid in full on maturity of May 24, 2009, and there will be no
conversion of debt to common stock. In addition to the above obligations, if we
elect to continue holding all our existing leases on a delayed rental basis, we
would have to pay approximately $560,000 during the year ending August 31, 2004.
The Company considers on a quarterly basis whether to continue holding all or
part of each acreage block by making delay rental payments on existing leases.

                                       22

<PAGE>


Results of Operations

     The twelve months ended August 31, 2003 ("2003") compared with the twelve
months ended August 31, 2002 ("2002")

     Operations during the fiscal year ended August 31, 2003 resulted in a net
loss of $5,237,613 compared to a net loss of $13,129,828 for the fiscal year
ended August 31, 2002.

     Oil and Gas Revenues and Expenses. During the year ended August 31, 2003,
we recorded $153,479 from the sale of 34,773 mcf of natural gas for an average
price of $4.41 per mcf, and $41,688 for the sale of 1,583 bbls of hydrocarbon
liquids for an average price of $26.33 per bbl. During the year ended August 31,
2002, we recorded $106,637 from the sale of 39,468 mcf of natural gas for an
average price of $2.60 per mcf, and $29,932 from the sale of 1,600 bbls of
hydrocarbon liquids for an average price of $18.71 per bbl. Lease operating
expenses in 2003 were $95,334 compared to $91,384 in 2002.

     Interest Income. We recorded $53,520 and $145,645 in interest income for
the years ended August 31, 2003 and 2002, respectively. Lower interest income in
2003 resulted from lower average cash balances in 2003 than in 2002, as cash was
utilized throughout 2003 to fund the Company's operations.

     General and Administrative Expenses. General and administrative expenses in
2003 were $1,265,912 compared to $1,496,329 in 2002. The lower expense in 2003
reflects reduced salary and wage expenses following staff resignations, and
lower costs incurred for financial advisory services in 2003 compared to 2002.

     Depreciation Depletion and Amortization. We recorded no depreciation,
depletion and amortization expense from oil and gas properties for the years
ended August 31, 2003 and August 31, 2002. The ELH#1 well continued producing
throughout 2003 and 2002; however, because we have recorded an impairment
against our entire amortizable full cost pool at both August 31, 2003 and 2002
there were no costs to amortize. We recorded $11,191 and $14,605 in depreciation
expense associated with capitalized office furniture and equipment during 2003
and 2002, respectively. Included in depreciation expense reported for 2003, is
$151,284 of depreciation of Asset Retirement Obligation assets, and $76,918 of
accretion of the unamortized discount of the Asset Retirement Obligation
liability. For further discussion of the Asset Retirement Obligation, see Note 4
to the Financial Statements included in this Form 10-K.

     Dry Hole, Impairment and Abandonments. In 2003 we recorded an impairment
expense of $3,234,029, of which $451,285 related to costs incurred in the East
Lost Hills prospect, and the remainder, $2,782,744, related to other undeveloped
prospects in California and the Rocky Mountain region, which were determined by
management to be impaired as of August 31, 2003. In 2002, we recorded an
impairment expense of $11,722,830, primarily for the remaining basis in our East
Lost Hills project. Additionally, approximately $54,000 of the 2002 impairment
charge related to a Colorado exploration project where an unsuccessful
exploration well was drilled in October 2002. Although properties may be
considered as evaluated for purposes of the ceiling test and included in the
impairment calculation, until these properties are completely abandoned, we may
continue to incur related costs. Until we can establish economic reserves, of
which there is no assurance, additional costs associated with these properties
are charged directly to impairment expense as incurred.

     Interest Expense. During 2003, we recorded interest expense of $310,457
compared to $82,894 in 2002. The increase reflects the existence of $6,000,000
in convertible notes for the entirety of 2003 compared to only 3.25 months of
2002. The notes are due May 24, 2009, and call for semi-annual interest payments
at an annual rate of 4.99% and are convertible into common stock at a conversion
price of $1.30 per share. The interest can be paid in cash or added to the
principal amount at the option of the Company. During 2003, the Company elected
to add $303,975 of accrued interest to the balance of the debt. We have
reflected the outstanding balance of these notes as Convertible Notes under Long
Term Debt on our August 31, 2003 and 2002 balance sheets.

     The twelve months ended August 31, 2002 ("2002") compared with the twelve
months ended August 31, 2001 ("2001")

     Operations during the fiscal year ended August 31, 2002 resulted in a net
loss of $13,129,828 compared with a net loss $13,142,291 for the fiscal year
ended August 31, 2001.

                                       23

<PAGE>


     Oil and Gas Revenues and Expenses. During the year ended August 31, 2002,
we recorded $102,637 from the sale of 39,468 mcf of natural gas for an average
price of $2.60 per mcf and $29,932 from the sale of 1,600 bbls of hydrocarbon
liquids for an average price of $18.71 per barrel. Lease operating expenses
during this period were $91,384. During the year ended August 31, 2001, we
recorded $1,055,382 from the sale of 99,535 mcf of natural gas for an average
price of $10.60 per mcf and $146,597 from the sale of 5,804 bbls of hydrocarbon
liquids for an average price of $25.26 per barrel. Lease operating expenses
during this period were $102,018. Production commenced at the East Lost Hills
ELH #1 well on February 6, 2001. Prior to this date, none of our oil or gas
properties was producing.

     Interest Income. We recorded $145,645 and $422,117 in interest income for
the years ended August 31, 2002 and August 31, 2001, respectively. Interest
income was higher in the prior fiscal year due to interest earned on cash
balances remaining from the common stock offering in March 2001 and the private
placement completed in August of 2000.

     General and Administrative Expense. We incurred $1,496,329 and $1,306,635
in general and administrative expenses during 2002 and 2001, respectively. The
increase results primarily from the value of warrants issued in conjunction with
a financial advisory agreement.

     Depreciation, Depletion and Amortization. We recorded no depreciation,
depletion and amortization expense from oil and gas properties for the years
ended August 31, 2002 or August 31, 2001. Although the ELH #1 began producing
during 2001, we recorded an impairment against our entire amortizable full cost
pool both at August 31, 2002 and August 31, 2001, and therefore had no costs to
amortize. We recorded $14,605 and $17,823 in depreciation expense associated
with capitalized office furniture and equipment during the years ended August
31, 2002 and August 31, 2001, respectively.

     Dry Hole, Impairment and Abandonments. In 2002, we recorded an impairment
expense of $11,722,830, primarily for the remaining basis in our East Lost Hills
project. Additionally, approximately $54,000 of the current year impairment
charge related primarily to a Colorado exploration project where an unsuccessful
exploration well was drilled in October 2002. Although properties may be
considered as evaluated for purposes of the ceiling test and included in the
impairment calculation, until these properties are completely abandoned, we may
continue to incur related costs. Until we can establish economic reserves, of
which there is no assurance, additional costs associated with these properties
are charged directly to impairment expense as incurred. In 2001, we recorded an
impairment of $13,339,911 against our oil and gas properties as the result of
the capitalized costs of a portion of our oil and gas properties exceeding the
present value of estimated future net revenues of proved reserves. The costs
from this impairment related primarily to our East Lost Hills project, and
included costs for our Southeast Maricopa project and our interests in the Cal
Canal and Lucky Dog prospects in the approximate amount of $2,812,000.

     Interest Expense. We recorded $82,894 in interest expense for the year
ended August 31, 2002 and no interest expense for the year ended August 31,
2001. The current year interest expense results from the May 24, 2002 sale of
convertible notes, for which we received $6 million in gross proceeds. The notes
are due May 24, 2009, and call for semi-annual interest payments at an annual
rate of 4.99% and are convertible into common stock at a conversion price of
$1.30 per share. The interest can be paid in cash or added to the principal
amount at the discretion of the Company. We have reflected the outstanding
balance of these notes as Convertible Notes under Long Term Debt on our August
31, 2002 balance sheet.

     The twelve months ended August 31, 2001 ("2001") compared with the twelve
months ended August 31, 2000 ("2000")

     Operations during the fiscal year ended August 31, 2001 resulted in a net
loss of $13,142,291 compared with a net loss $982,547 for the fiscal year ended
August 31, 2000.

     Oil and Gas Revenues and Expenses. Production commenced at the East Lost
Hills ELH #1 well on February 6, 2001. We recorded $1,055,382 from the sale of
99,535 mcf of natural gas for an average price of $10.60 per mcf and $146,597
from the sale of 5,804 bbls of hydrocarbon liquids for an average price of
$25.26 per barrel during the year ended August 31, 2001. Lease operating
expenses during this period were $102,018. We recorded no revenues or expenses
from oil and gas operations for the year ended August 31, 2000. None of our oil
or gas properties was producing before February 6, 2001.

     Interest Income. We recorded $422,117 and $165,411 in interest income for
the years ended August 31, 2001 and August 31, 2000, respectively. The increase
in the year ended August 31, 2001 is attributable to interest earned on cash
balances remaining from the common stock offering in March 2001 and the private
placement completed in August of 2000.

                                       24

<PAGE>


     General and Administrative Expense. We incurred $1,306,635 and $929,420 in
general and administrative expenses during 2001 and 2000, respectively. The
increase is primarily attributable to unrecoverable financing costs and
increases in personnel and salaries.

     Depreciation, Depletion and Amortization. We recorded no depreciation,
depletion and amortization expense from oil and gas properties for the years
ended August 31, 2001 or August 31, 2000. Although we commenced our first
production during 2001, we recorded an impairment against our entire amortizable
full cost pool at August 31, 2001, and therefore had no costs to amortize. In
the prior year, none of our oil and gas properties were producing, and therefore
no DD&A expense was recognized. We recorded $17,823 and $18,327 in depreciation
expense associated with capitalized office furniture and equipment during the
years ended August 31, 2001 and August 31, 2000, respectively.

     Dry Hole, Impairment and Abandonments. In 2001, we recorded an impairment
of $13,340,000 against our oil and gas properties as the result of the
capitalized costs of a portion of our oil and gas properties exceeding the
present value of estimated future net revenues of proved reserves. The costs
from this impairment relating to our East Lost Hills project include drilling
and completion costs associated with our working interests in the ELH #1, ELH
#2, ELH #3, Bellevue 1-17 and 1-17R wells and allocated land, geological and
geophysical costs. In addition, we have recorded property impairments with
respect to our Southeast Maricopa project and our interests in the Cal Canal and
Lucky Dog prospects in the approximate amount of $2,812,000. In 2000, we
recorded an impairment of $200,000 against our Cal Canal project.

     Interest Expense. We recorded no interest expense for the year ended August
31, 2001 and nominal interest expense for the year ended August 31, 2000.

     Critical Accounting Policies And Estimates

     We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our Financial
Statements.

     Reserve Estimates:

     Our estimates of oil and natural gas reserves, by necessity, are
projections based on geological and engineering data, and there are
uncertainties inherent in the interpretation of such data as well as the
projection of future rates of production and the timing of development
expenditures. Reserve engineering is a subjective process of estimating
underground accumulations of oil and natural gas that are difficult to measure.
The accuracy of any reserve estimate is a function of the quality of available
data, engineering and geological interpretation and judgment. Estimates of
economically recoverable oil and natural gas reserves and future net cash flows
necessarily depend upon a number of variable factors and assumptions, such as
historical production from the area compared with production from other
producing areas, the assumed effects of regulations by governmental agencies and
assumptions governing future oil and natural gas prices, future operating costs,
severance and excise taxes, development costs and workover and remedial costs,
all of which may in fact vary considerably from actual results. For these
reasons, estimates of the economically recoverable quantities of oil and natural
gas attributable to any particular group of properties, classifications of such
reserves based on risk of recovery, and estimates of the future net cash flows
expected from there may vary substantially. Any significant variance in the
assumptions could materially affect the estimated quantity and value of the
reserves, which could affect the carrying value of our oil and gas properties
and/or the rate of depletion of the oil and gas properties. Actual production,
revenues and expenditures with respect to our reserves will likely vary from
estimates, and such variances may be material.

     Many factors will affect actual net cash flows, including the following:
the amount and timing of actual production; supply and demand for natural gas;
curtailments or increases in consumption by natural gas purchasers; and changes
in governmental regulations or taxation.

     Property, Equipment and Depreciation:

     We follow the full cost method to account for our oil and gas exploration
and development activities. Under the full cost method, all costs incurred which
are directly related to oil and gas exploration and development are capitalized
and subjected to depreciation and depletion. Depletable costs also include
estimates of future development costs of proved reserves. Costs related to
undeveloped oil and gas properties may be excluded from depletable costs until

                                       25

<PAGE>


those properties are evaluated as either proved or unproved. The net capitalized
costs are subject to a ceiling limitation based on the estimated present value
of discounted future net cash flows from proved reserves. As a result, we are
required to estimate our proved reserves at the end of each quarter, which is
subject to the uncertainties described in the previous section. Gains or losses
upon disposition of oil and gas properties are treated as adjustments to
capitalized costs, unless the disposition represents a significant portion of
the Company's proved reserves.

     Revenue Recognition:

     The Company recognizes oil and gas revenues from its interests in producing
wells as oil and gas is produced and sold from these wells. The Company has no
gas balancing arrangements in place. Oil and gas sold is not significantly
different from the Company's product entitlement.

     Recent Accounting Pronouncements

     In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS
146 addresses financial accounting and reporting for costs associated with exit
or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity". SFAS 146 generally requires a liability for a cost
associated with an exit or disposal activity to be recognized and measured
initially at its fair value in the period in which the liability is incurred.
The pronouncement is effective for exit or disposal activities initiated after
December 31, 2002. The Company does not believe the adoption of SFAS 146 will
have any impact on its financial position or results of operations,

     SFAS 147, "Acquisitions of Certain Financial Institutions," was issued in
December 2002 and is not expected to apply to the Company's current or planned
activities.

     In December 2002, the FASB approved SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement 123."
SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
148 amends the disclosure requirements of SFAS 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS 148 is effective for financial statements for
fiscal years ending after December 15, 2002. The Company will continue to
account for stock based compensation using the methods detailed in the
stock-based compensation accounting policy.

     In April 2003, the FASB approved SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS 149 is not expected to
apply to the Company's current or planned activities.

     In June 2003, the FASB approved SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. This
Statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS 150 is not expected to have an effect
on the Company's financial position.

     In 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations." SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement requires companies to record
the present value of obligations associated with the retirement of tangible
long-lived assets in the period in which it is incurred. The liability is
capitalized as part of the related long-lived asset's carrying amount. Over
time, accretion of the liability is recognized as an operating expense and the
capitalized cost is depreciated over the expected useful life of the related
asset. The Company's asset retirement obligations relate primarily to the
plugging, dismantlement, removal, site reclamation and similar activities of its
oil and gas properties. Prior to adoption of this statement, such obligations
were accrued ratably over the productive lives of the assets through its
depreciation, depletion and amortization for oil and gas properties without
recording a separate liability for such amounts.

The transition adjustment related to adopting SFAS 143 on September 1, 2002 was
recognized as a cumulative effect of a change in accounting principle. The
cumulative effect on net income of adopting SFAS No. 143 was a net unfavorable
effect of $341,175. At the time of adoption, total assets increased $629,816,
and total liabilities increased $769,175. The amounts recognized upon adoption

                                       26

<PAGE>


are based upon numerous estimates and assumptions, including future retirement
costs, future recoverable quantities of oil and gas, future inflation rates and
the credit-adjusted risk-free interest rate.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information required under Item 7A is not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Financial Statements and schedules that constitute Item 8 are attached
at the end of Annual Report on Form 10-K. An index to these Financial Statements
and schedules is also included in Item 14(a) of this Annual Report on Form 10-K.

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

     Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

     As of the end of the period covered by this report, the Company conducted
an evaluation under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal controls over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting. PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

     The directors and executive officers of the Company, their respective
positions and ages, and the year in which each director was first elected, are
set forth in the following table. Each director has been elected to hold office
until the next annual meeting of stockholders and thereafter until his successor
is elected and has qualified. Additional information concerning each of these
individuals follows the table.

<TABLE>
<CAPTION>


          Name               Age               Position with the Company               Director Since
          ----               ---               -------------------------               --------------

<S>                          <C>                                                             <C>
D. Scott Singdahlsen         45      Chief Executive Officer, Chief Financial                1997
                                     Officer, President, and Chairman Of the Board
S. L. Hutchison              71      Director                                                1999
David Kilpatrick             53      Director                                                2002
Bryce W. Rhodes              50      Director                                                1999
Kenneth R. Berry, Jr.        51      Vice President-Land                                      --
</TABLE>

     D. Scott Singdahlsen has served as President, Chief Executive Officer, and
Chairman of the Board of the Company since August 1997. Mr. Singdahlsen
co-founded PYR Energy, LLC in 1996, and served as General Manager and
Exploration Coordinator. In 1992, Mr. Singdahlsen co-founded Interactive Earth

                                       27

<PAGE>


Sciences Corporation, a 3-D seismic management and interpretation consulting
firm in Denver, where he served as vice president and president and lead seismic
interpretation specialist from 1992 to 1996. Prior to forming Interactive Earth
Sciences Corporation, Mr. Singdahlsen was employed as a Development Geologist
for Chevron USA in the Rocky Mountain region. At Chevron, Mr. Singdahlsen was
involved in 3-D seismic reservoir characterization projects and geostatistical
analysis. Mr. Singdahlsen started his career at UNOCAL as an Exploration
Geologist in Midland, Texas. Mr. Singdahlsen earned a B.A. in Geology from
Hamilton College and a M.S. in Structural Geology from Montana State University.

     David B. Kilpatrick has been a Director of the Company since June 2002. He
is currently President of Kilpatrick Energy Group, which provides strategic
management consulting services to the California oil and gas industry. Prior to
the 1998 merger with Texaco, he was President and Chief Operating Officer of
Monterey Resources, Inc., the largest independent oil and gas producer in
California. Previously, he served as Western Division Manager of Monterey's
corporate predecessor, Santa Fe Energy Resources, from 1990 to 1996. Mr.
Kilpatrick has served as President of the California Independent Petroleum
Association and is a member of its Board of Directors and also serves as a
Director of the Independent Oil Producers Agency. In the past, he has served on
the Board of Directors of the Western States Petroleum Association and the
Conservation Committee of California Oil and Gas Producers. He earned a Bachelor
of Science degree in Petroleum Engineering from the University of Southern
California and a Bachelor's Degree in Geology and Physics from Whittier College.

     S. L. Hutchison has been a Director of the Company since April 1999, when
he was nominated and elected to the Board in connection with the sale by the
Company of convertible promissory notes issued in a private placement
transaction in October and November 1998. Since 1979, Mr. Hutchison has served
as Vice President and Chief Financial Officer of Victory Oil Company, an oil and
gas production company based in California, and other companies in the Victory
Group of Companies. Also during that period, Mr. Hutchison has served as
Vice-President and Chief Financial Officer and a Director of Crail Capital, a
real estate investment company that is owned by Victory Oil Company, and Victex,
Inc., a real estate and oil and gas company. Mr. Hutchison also serves as Chief
Financial Officer and a director of each of the Crail Johnson Foundation and the
Independent Oil Producers Agency, and is the Treasurer and a director of the Los
Angeles Maritime Institute. Mr. Hutchison received a Bachelor's degree in
accounting from the University of Washington in 1954.

     Bryce W. Rhodes has been a Director of the Company since April 1999, when
he was nominated and elected to the Board in connection with the sale by the
Company of convertible promissory notes issued in a private placement
transaction in October and November 1998. From 1996 until September 2003, Mr.
Rhodes has served as Vice President of Whittier Energy Company ("WEC"), an oil
and gas investment company. In September 2003, WEC merged with Olympic
Resources, Inc. and Mr. Rhodes was appointed as President and Chief Executive
Officer. Mr. Rhodes served as Investment Manager of WEC from 1990 until 1996.
Mr. Rhodes received B.A. degrees in Geology and Biology from the University of
California, Santa Cruz, in 1976 and an MBA degree from Stanford University in
1979.

     Kenneth R. Berry, Jr. has served as Vice President of land since August
1999, and as land manager for the Company since October 1997. Mr. Berry is
responsible for the management of all land issues including leasing and
permitting. Prior to joining the Company, Mr. Berry served as the managing land
consultant for Swift Energy Company in the Rocky Mountain region. Mr. Berry
began his career in the land department with Tenneco Oil Company after earning a
B.A. degree in Petroleum Land Management at the University of Texas - Austin.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's common stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
The Company believes that during the year ended August 31, 2003, its officers,
directors and holders of more than 10% of the Company's common stock complied
with all Section 16(a) filing requirements, except that each of D. Scott
Singdahlsen, our Chief Executive Officer and a director, Andrew P. Calerich, our
former Chief Financial Officer, and Ken Berry, our Vice President, was late
filing a Form 4 with respect to their receipt of stock options on February 5,
2003. In making these statements, the Company has relied upon representations
and its review of copies of the Section 16(a) reports filed for the fiscal year
ended August 31, 2003 on behalf of the Company's directors, officers and holders
of more than 10% of the Company's common stock.

                                       28

<PAGE>


Employee Code of Conduct and Code of Ethics and Reporting of Accounting Concerns

     The Company adopted an Employee Code of Conduct (the "Code of Conduct"). We
require all employees to adhere to the Code of Conduct in addressing legal and
ethical issues encountered in conducting their work. The Code of Conduct
requires that our employees avoid conflicts of interest, comply with all laws
and other legal requirements, conduct business in an honest and ethical manner
and otherwise act with integrity and in the Company's best interest.

     The Company also adopted a Code of Ethics for our Chief Executive Officer,
our Chief Financial Officer, our Controller and all other financial officers and
executives. This Code of Ethics supplements our Code of Conduct and is intended
to promote honest and ethical conduct, full and accurate reporting, and
compliance with laws as well as other matters. The Code of Conduct and Code of
Ethics are filed with the SEC as exhibits to this Annual Report.

     Further, the Company has established "whistle-blower procedures" which
provides a process for the confidential and anonymous submission, receipt,
retention and treatment of complaints regarding accounting, internal accounting
controls or auditing matters. These procedures provide substantial protections
to employees who report company misconduct.

Audit Committee Financial Expert

     The Company's Board of Directors has determined that Mr. S.L. Hutchison is
the Company's audit committee financial expert.

Identification of Audit Committee

     The Board of Directors currently has an Audit Committee consisting of
Messrs. Hutchison (Chairman), Kilpatrick and Rhodes. The Audit Committee is
primarily responsible for the effectiveness of the Company's accounting policies
and practices, financial reporting and internal controls. The Audit Committee
oversees the Company's financial reporting process on behalf of the Board of
Directors. Management has the primary responsibility for the financial
statements and the reporting process, including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
and discussed with management the audited financial statements in this Annual
Report on Form 10-K for the year ended August 31, 2003 and the unaudited
financial statements included in the Quarterly Reports on Form 10-Q for the
first three quarters of the fiscal year ended August 31, 2003.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

     The following table sets forth in summary form the compensation received
during each of the last three completed fiscal years ended August 31, 2003 by D.
Scott Singdahlsen, our Chief Executive Officer, President, Chief Financial
Officer and Chairman Of The Board, and Andrew P. Calerich, our former Chief
Financial Officer, Vice President and Secretary. Other than Mr. Singdahlsen,
none of our executive officers received total salary and bonus exceeding
$100,000 during any of the last three fiscal years.

                                       29

<PAGE>
<TABLE>
<CAPTION>


                                                 Summary Compensation Table
---------------------------------------------------------------------------------------------------------------------------
                                         Annual Compensation                            Long-Term Compensation
                             ------------------------------------------   -------------------------------------------------
                                                                                  Awards            Payouts
                                                                          ----------------------    -------
                                                           Other Annual   Restricted                LTIP         All Other
                             Fiscal   Salary     Bonus     Compensation      Stock                 Payouts     Compensation
Name and Principal Position   Year     ($)(1)    ($)(2)       ($)(3)      Awards ($)   Options(#)   ($)(4)        ($)(5)
---------------------------   ----     ------    ------       ------      ----------   ----------   ------        ------

<S>                           <C>      <C>        <C>           <C>            <C>      <C>            <C>           <C>
D. Scott Singdahlsen          2003     $175,000   $-0-         -0-            -0-       281,750       -0-           -0-
Chief Executive Officer,
Chief Financial Officer,      2002     $175,000   $-0-         -0-            -0-         -0-         -0-           -0-
President and Chairman Of
the Board                     2001     $128,250  $40,000       -0-            -0-         -0-         -0-           -0-


Andrew P. Calerich            2003      $96,772   $-0-         -0-            -0-       152,500(7)    -0-           -0-
Former Chief Financial
Officer, Vice President       2002      $95,682   $-0-         -0-            -0-         -0-         -0-           -0-
and Secretary(6)
                              2001      $90,666  $10,000       -0-            -0-         -0-         -0-           -0-

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

(1)  The dollar value of base salary (cash and non-cash) received during the
     year indicated.

(2)  The dollar value of bonus (cash and non-cash) received during the year
     indicated.

(3)  During the period covered by the Summary Compensation Table, we did not pay
     any other annual compensation not properly categorized as salary or bonus,
     including perquisites and other personal benefits, securities or property.

(4)  We do not have in effect any plan that is intended to serve as incentive
     for performance to occur over a period longer than one fiscal year except
     for our 1997 and 2000 Stock Option Plans.

(5)  All other compensation received that we could not properly report in any
     other column of the Summary Compensation Table including annual Company
     contributions or other allocations to vested and unvested defined
     contribution plans, and the dollar value of any insurance premiums paid by,
     or on behalf of, the Company with respect to term life insurance for the
     benefit of the named executive officer, and, the full dollar value of the
     remainder of the premiums paid by, or on behalf of, the Company.

(6)  Mr. Calerich resigned as an employee and officer of the Company in June
     2003.

(7)  These options expired by their terms following Mr. Calerich's resignation
     without being exercised.

                                       30

<PAGE>


Option Grants Table

     The following table provides certain summary information concerning
individual grants of stock options made during the fiscal year ended August 31,
2003 to the following named executive officers.

                                      Option Grants For Fiscal Year Ended August 31, 2003
-----------------------------------------------------------------------------------------------------------------
                              Number of Securities      % of Total Options
                               Underlying Options      Granted to Employees     Exercise Price      Expiration
           Name                    Granted (#)            in Fiscal Year           ($/Share)           Date
           ----               --------------------     --------------------     --------------      ----------
D. Scott Singdahlsen                 281,750                   29.9%                  (1)            2/5/2010

Andrew P. Calerich                   152,500                   16.2%                  (2)            2/5/2010(3)

-----------

(1)  Options to purchase 81,750 shares are exercisable at $1.30 per share and
     options to purchase 200,000 shares are exercisable at $.29 per share.

(2)  Options to purchase 77,500 shares are exercisable at $1.30 per share and
     options to purchase 75,000 shares are exercisable at $.29 per share.

(3)  Mr. Calerich resigned in June 2003 and these options expired by their terms
     without being exercised.

Aggregated Option Exercises And Fiscal Year-End Option Value Table

     The following table provides certain summary information concerning stock
option exercises during the fiscal year ended August 31, 2003 by the named
executive officers and the value of unexercised stock options held by the named
executive officers as of August 31, 2003.

                                      Aggregated Option Exercises For Fiscal Year Ended
                                        August 31, 2003 And Year-End Option Values(1)
---------------------------------------------------------------------------------------------------------------------------
                                                                    Number of Securities
                                                                   Underlying Unexercised           Value of Unexercised
                                                                      Options at Fiscal           In-the-Money Options at
                                                                       Year-End (#)(4)             Fiscal Year-End ($)(5)
                                                                ----------------------------    ---------------------------
                             Shares Acquired   Value Realized
           Name               on Exercise(2)       ($)(3)       Exercisable    Unexercisable    Exercisable   Unexercisable
           ----               --------------   --------------   -----------    -------------    -----------   -------------
D. Scott Singdahlsen               None             $-0-          171,666         325,084          $-0-          $42,000

Andrew P. Calerich                 None             $-0-          165,000(6)      197,500(6)       $-0-          $15,750
</TABLE>

-----------

(1)  No stock appreciation rights are held by any of the named executive
     officers.

(2)  The number of shares received upon exercise of options during the year
     ended August 31, 2003.

(3)  With respect to options exercised during the year ended August 31, 2003,
     the dollar value of the difference between the option exercise price and
     the market value of the option shares purchased on the date of the exercise
     of the options.

                                       31

<PAGE>


(4)  The total number of unexercised options held as of August 31, 2003,
     separated between those options that were exercisable and those options
     that were not exercisable on that date.

(5)  For all unexercised options held as of August 31, 2003, the aggregate
     dollar value of the excess of the market value of the stock underlying
     those options over the exercise price of those unexercised options. These
     values are shown separately for those options that were exercisable and
     those options that were not yet exercisable on August 31, 2003 based on the
     closing sale price of our common stock on the last business day before that
     date, which was $.50 per share.

(6)  Mr. Calerich resigned as an employee and officer in June 2003 and these
     options subsequently expired without being exercised.

Employee Retirement Plans, Long-Term Incentive Plans and Pension Plans

     Excluding the Company's stock option plans, we do not have any long-term
incentive plan to serve as incentive for performance to occur over a period
longer than one fiscal year.

Compensation of Outside Directors

     On April 12, 2002, the Company granted options to purchase 20,000 shares of
common stock to Mr. Hutchison and Mr. Rhodes who, at that time, were the only
outside directors of the Company. The exercise price of the options is $1.65 per
share, with 5,000 of the options immediately vesting and the remaining 15,000 of
the options vesting 2,500 options for each fiscal quarter served as Director
beginning June 1, 2002. Effective with Mr. Kilpatrick becoming a non-employee
member of the Board of Directors on June 4, 2002, the Company granted him
options to purchase 20,000 shares of common stock at an exercise price of $1.72
per share. The options vest 2,500 options for each fiscal quarter served as
Director beginning with the Company's fiscal quarter ended August 31, 2002.

Compensation Committee Report on Executive Compensation

     None of the members of the Compensation Committee of the Board of Directors
is an employee of the Company. The Compensation Committee sets and administers
the policies that govern the annual and long-term compensation of executive
officers of the Company. The Compensation Committee makes recommendations to the
full Board concerning compensation of executive officers and awards of stock
options under the Company's stock option plans.

     Compensation Policies Toward Executive Officers. The Compensation
Committee's executive compensation policies are designed to provide competitive
levels of compensation that relate compensation to the Company's annual and
long-term performance, reward above average corporate performance compared to
other companies in the oil and gas industry, recognize individual initiative and
achievements, and assist the Company in retaining and attracting qualified
executive officers. The Compensation Committee attempts to achieve these
objectives through a combination of base salary, stock options, and cash bonus
awards. In determining compensation, the Compensation Committee considers the
matters discussed in this report as well as the recommendations of the Chief
Executive Officer concerning other executive officers and employees. The
Compensation Committee met on February 5, 2003 to consider executive salaries
for the fiscal year ended August 31, 2003, as well as stock option grants and
cash bonuses regarding performance during the year ended August 31, 2002. This
report is based on that meeting and, with respect to the discussion of executive
salaries for the fiscal year ended August 31, 2002, the meeting of the Committee
held on April 12, 2002.

     Executive Salaries. Executive salaries are reviewed by the Compensation
Committee on a yearly basis and are set for individual executive officers based
on subjective evaluations of each individual officer's performance and
contributions to the Company, the Company's past performance, the Company's
future prospects and long-term growth potential and a comparison of the salary
ranges for executives of other companies in the oil and gas industry. Through
consideration of these criteria, the Compensation Committee believes that
salaries may be set in a manner that is both competitive and reasonable within
the Company's industry.

     The consideration of the Company's performance for the year ended August
31, 2002 included a review of the development of the East Lost Hills prospect
and the status of the Company's other projects. The consideration of the
Company's future prospects and potential for long-term growth included advancing
the Company's additional exploration projects, and continued recognition of the
Company in the investment community.

                                       32

<PAGE>


     After completing its reviews at a meeting of the Committee on February
2003, the Committee determined not to adjust salaries for the year ended August
31, 2003 and maintained Mr. Singdahlsen's annual base salary at $175,000 for
fiscal 2003.

     Stock Options. Stock options are granted to executive officers and other
employees of the Company by the full Board after recommendations of the
Compensation Committee as a means of providing long-term incentive to the
Company's employees. The Compensation Committee believes that stock options
encourage increased performance by the Company's employees and align the
interests of the Company's employees with the interests of the Company's
stockholders. Decisions concerning recommendations for the granting of stock
options to a particular executive officer are made after reviewing the number of
options previously granted to that officer, the number of options granted to
other executive officers (with higher ranking officers generally receiving more
options in the aggregate), and a subjective evaluation of that officer's
performance and contributions to the Company as described above under
"--Executive Salaries" and anticipated involvement in the Company's future
prospects. While stock options are viewed by the Committee on a more forward
looking basis than cash bonus awards based on prior performance, an executive
officer's prior performance will impact the number of options that may be
granted. At its February 5, 2003 meeting, after considering the foregoing
factors, the Committee recommended that the Company grant to Mr. Singdahlsen
options to purchase 200,000 shares for $.29 per share (the closing price on that
day) and 81,750 shares at $1.30 until February 4, 2010, and grant to Mr.
Calerich options to purchase 75,000 shares for $.29 per share and 77,500 shares
for $1.30 per share until February 4, 2010. The Board approved the grants
recommended by the Committee.

     Cash Bonus Awards. The Compensation Committee considers on an annual basis
whether to pay cash bonuses to some or all of the Company's employees, including
the Company's executive officers. The Compensation Committee considers the
granting of bonuses with the objective that the Company will remain competitive
in its compensation practices and be able to retain highly qualified executive
officers. In determining the amounts of bonuses, the Compensation Committee
considers the performance of the Company and each executive officer in the past
year as described above under "--Executive Salaries". The Committee's review of
the Company's performance concentrates on exploration success, prospect
generation, investment community recognition of the Company and financial
stability. Based on the foregoing, at its April 12, 2002 meeting the Committee
did not recommend bonuses for Mr. Singdahlsen or Mr. Calerich. No bonuses have
subsequently been granted.

     Chief Executive Officer Compensation. Generally, the compensation of the
Company's Chief Executive Officer is determined in the same manner as the
compensation for other executive officers of the Company as described above. The
Committee considered Mr. Singdahlsen's compensation after determining the base
salaries and bonuses of the other executive officers and the Committee's
decisions concerning Mr. Singdahlsen's compensation included consideration of
the relative amounts paid to these officers and Mr. Singdahlsen's added
responsibilities as Chief Executive Officer. As a result of these
considerations, as well as the compensation being paid to the chief executive
officers of other relatively comparable companies in the oil and gas industry,
the Committee did not increase Mr. Singdahlsen's base salary or pay Mr.
Singdahlsen a cash bonus as described above. No adjustments have subsequently
been made to Mr. Singdahlsen's base salary or bonus.

                           The Compensation Committee

                                 S. L. Hutchison
                               David B. Kilpatrick
                                 Bryce W. Rhodes

     1997 Stock Option Plan

     In August 1997, our 1997 Stock Option Plan (the "1997 Plan") was adopted by
the Board Of Directors and subsequently approved by the stockholders. Pursuant
to the 1997 Plan, we may grant options to purchase an aggregate of 1,000,000
shares of common stock to key employees, directors, and other persons who have
contributed or are contributing to our success. The options granted pursuant to
the 1997 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient or they may be nonqualified options. The 1997 Plan
may be administered by the Board Of Directors or by an option committee.
Administration of the 1997 Plan includes determination of the terms of options
granted under the 1997 Plan. At August 31, 2003, options to purchase 716,500
shares were outstanding under the Plan and no options were available to be
granted under the 1997 Plan.

                                       33

<PAGE>


     2000 Stock Option Plan

     In March 1999, our 2000 Stock Option Plan (the "2000 Plan") was adopted by
the Board Of Directors and subsequently approved by the stockholders. Pursuant
to the 2000 Plan, we may grant options to purchase shares of our common stock to
key employees, directors, and other persons who have contributed or are
contributing to our success. We initially could grant options to purchase up to
500,000 shares pursuant to the 2000 Plan. In June 2001, our stockholders
approved an amendment which allows us to grant options to purchase up to
1,500,000 shares pursuant to the 2000 Plan. The options granted pursuant to the
2000 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient or non-qualified options. The 2000 Plan may be
administered by the Board Of Directors or by an option committee. Administration
of the 2000 Plan includes determination of the terms of options granted under
the 2000 Plan. As of August 31, 2003, options to purchase 1,500,000 shares were
outstanding under the 2000 Plan and no options were available to be granted
pursuant to the 2000 Plan.

     Employment Contracts And Termination of Employment And Change-In-Control
     Arrangements

     We do not have any written employment contracts with any of our officers or
other employees. We have no compensatory plan or arrangement that results or
will result from the resignation, retirement, or any other termination of an
executive officer's employment or from a change-in-control or a change in an
executive officer's responsibilities following a change-in-control, except that
both the 1997 Plan and the 2000 Plan provide for vesting of all outstanding
options in the event of the occurrence of a change-in-control.

     Performance Graph

     The following line graph compares the yearly percentage change in the
cumulative total stockholder return, assuming reinvestment of dividends
(regarding shares other than our common stock, on which no dividends have been
paid) for (1) our common stock, (2) the American Stock Exchange Oil Index, and
(3) the Standard & Poors S&P 500 Index. The comparison shown in the graph is for
the years ended August 31, 1999, 2000, 2001, 2002 and 2003. The cumulative total
stockholder return on the Company's common stock was measured by dividing the
difference between the Company's share price at both the end and at the
beginning of the measurement period by the share price at the beginning of the
measurement period.
<TABLE>
<CAPTION>


                             [Performance Graph appears here based on the following data points:

                                 8/29/98      8/31/99     8/31/00      8/31/01       8/30/02      8/29/03
                                 -------      -------     -------      -------       -------      -------
<S>                               <C>         <C>         <C>          <C>           <C>          <C>
PYR Energy Corporation            $100        740.00      780.00       332.80        160.00         80.00
Amex Oil Index                    $100        133.50      133.16       140.48        125.55        122.88
S&P 500                           $100        137.93      158.54       118.42         95.70        105.30]
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Stock Ownership Of Directors And Principal Stockholders

     As of December 11, 2003, there were 23,701,357 shares of common stock
outstanding. The following table sets forth certain information as of that date
with respect to the beneficial ownership of common stock by each director and
nominee for director, by all executive officers and directors as a group, and by
each other person known by us to be the beneficial owner of more than five
percent of our common stock:

                                                                   Percentage of
                                         Number of Shares              Shares
Name and Address of Beneficial Owner   Beneficially Owned(1)        Outstanding
------------------------------------   ---------------------        -----------

D. Scott Singdahlsen                        2,097,617(2)                 8.7%
1675 Broadway, Suite 2450
Denver, Colorado  80202

                                       34

<PAGE>

                                                                   Percentage of
                                         Number of Shares              Shares
Name and Address of Beneficial Owner   Beneficially Owned(1)        Outstanding
------------------------------------   ---------------------        -----------

S.L. Hutchison                              3,288,408(3)                13.9%
c/o Victory Oil Company
222 West Sixth Street, Suite 1010
San Pedro, California  90731

Bryce W. Rhodes                               266,539(4)                 1.1%
c/o Whittier Energy Company
7770 El Camino Real
Carlsbad, CA 92009

David Kilpatrick                               15,000(5)                 *

All Executive Officers and                  5,895,329(2)(3)(4)(5)(6)    24.4%
Directors as a group (five persons)

Victory Oil Company                         3,079,384(7)                13.0%
222 West Sixth Street, Suite 1010
San Pedro, California  90731

Eastbourne Capital Management, L.L.C.       8,483,211(8)                29.7%
1101 Fifth Avenue, Suite 160
San Rafael, CA  94901

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

(*)  Less than one percent.

(1)  "Beneficial ownership" is defined in the regulations promulgated by the
     U.S. Securities and Exchange Commission as having or sharing, directly or
     indirectly (1) voting power, which includes the power to vote or to direct
     the voting, or (2) investment power, which includes the power to dispose or
     to direct the disposition of shares of the common stock of an issuer. The
     definition of beneficial ownership includes shares underlying options or
     warrants to purchase common stock, or other securities convertible into
     common stock, that currently are exercisable or convertible or that will
     become exercisable or convertible within 60 days. Unless otherwise
     indicated, the beneficial owner has sole voting and investment power.

(2)  The shares shown for Mr. Singdahlsen include 200,000 shares owned by Mr.
     Singdahlsen's two minor children. Also includes options to purchase 100,000
     shares at $4.40 per share until May 15, 2005 and options to purchase
     100,000 shares at $5.98 per share until November 27, 2005.

(3)  Includes options to purchase 17,500 shares at $1.65 per share until April
     11, 2007 that currently are exercisable or that will become exercisable
     within the next 60 days. Also includes the shares shown as beneficially
     owned by Victory Oil Company as described in note (7) below. Mr. Hutchison
     is the Vice President and Chief Financial Officer of Victory Oil Company.
     Mr. Hutchison disclaims beneficial ownership of the shares beneficially
     owned by Victory Oil Company.

(4)  Includes 13,000 shares of common stock owned by Mr. Rhodes and 64,414
     shares of common stock owned by Adventure Seekers Travel, Inc. Adventure
     Seekers is owned by Mr. Rhodes' wife and Mr. Rhodes is the President of
     Adventure Seekers. Also includes 171,625 shares that are held by Whittier
     Energy Company. Mr. Rhodes is a Vice President of Whittier Energy Company.
     Mr. Rhodes disclaims beneficial ownership of the shares beneficially owned
     by Whittier Energy Company. Also includes options to purchase 17,500 shares
     at $1.65 per share until April 11, 2007 that currently are exercisable or
     that will become exercisable within the next 60 days.

                                       35

<PAGE>


(5)  Includes options to purchase 15,000 shares at $1.72 per share until June 4,
     2007 that currently are exercisable or that will become exercisable within
     the next 60 days owned by Mr. Kilpatrick.

(6)  Includes the following securities held directly or indirectly by Kenneth R.
     Berry, Jr., who is Vice President of Land: an aggregate of 70,265 shares
     owned by various entities, IRAs, and trusts with which Mr. Berry, or his
     spouse or minor daughter, is associated; and options to purchase 157,500
     shares of common stock at exercise prices ranging from $.29 to $5.44 per
     share that currently are exercisable or that will become exercisable within
     the next 60 days.

(7)  Includes 100,000 shares owned by Crail Fund, a partnership that is owned by
     the shareholders of Victory Oil Company. See "Certain Transactions With
     Management And Principal Stockholders."

(8)  The shares reflected include the shares beneficially owned by Eastbourne
     Capital Management, L.L.C., a registered investment adviser, Richard Jon
     Barry, Manager of Eastbourne and the following companies to which
     Eastbourne is investment adviser: Black Bear Offshore Master Fund Limited,
     a Cayman Island exempted company, Black Bear Fund I, L.P. and Black Bear
     Fund II, LLC. These shares include the equivalent shares of common stock
     underlying $6,303,975 of convertible notes held by Black Bear Offshore
     Master Fund Limited, Black Bear Fund I, L.P. and Black Bear Fund II, LLC in
     the aggregate amount of 4,849,211 shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On May 24, 2002, certain investment entities managed by Eastbourne Capital
Management, LLC purchased $6 million of convertible notes from the Company. The
notes provide for semi-annual interest payments at an annual rate of 4.99% and
are convertible into common stock at the rate of $1.30 per share. At the time of
the transaction, these entities had aggregate ownership in PYR Energy
Corporation of approximately 15%. Concurrent with the sale, we agreed to add
Messrs. Eric Sippel and Borden Putnam, of Eastbourne, to our Board of Directors.
Messrs. Sippel and Putnam resigned from the board in August 2003, although
Eastbourne still has the right to designate two individuals to serve on the
Board.

     During the fiscal year ended August 31, 2002, there were no other
transactions between the Company and its directors, executive officers or known
holders of greater than five percent of the Company's common stock in which the
amount involved exceeded $60,000 and in which any of the foregoing persons had
or will have a material interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

     Wheeler Wasoff, P.C., the Company's principal accountants, billed the
Company $29,058 for the year ended August 31, 2003 and $32,973 for the year
ended August 31, 2002 for professional services rendered by Wheeler Wasoff, P.C.
for the audit of the Company's annual financial statements and review of
financial statements included in the Company's Forms 10-Q and services normally
provided by Wheeler Wasoff, P.C. in connection with statutory and regulatory
filings or engagements for those fiscal years.

Audit-Related Fees

     For the years ended August 31, 2003 and August 31, 2002, Wheeler Wasoff,
P.C. did not provide the Company with any services for assurance and related
services provided by Wheeler Wasoff, P.C. that are reasonably related to the
performance of the audit or review of the Company's financial statements and are
not reported above under "--Audit Fees."

Tax Fees

     For the years ended August 31, 2003 and August 31, 2002, Wheeler Wasoff,
P.C. billed the Company $2,150 and $2,750, respectively, for professional
services for tax compliance, tax advice, and tax planning.

                                       36

<PAGE>


All Other Fees

     For the years ended August 31, 2003 and August 31, 2002, Wheeler Wasoff,
P.C. did not bill the Company for products and services other than those
described above.

Audit Committee Pre-Approval Policies

     The audit committee currently does not have any pre-approval policies or
procedures concerning services performed by Wheeler Wasoff, P.C. All the
services performed by Wheeler Wasoff, P.C. that are described above were
pre-approved by the audit committee. Less than 50% of the hours expended on
Wheeler Wasoff, P.C.'s engagement to audit the Company's financial statements
for the fiscal years ended August 31, 2003 and 2002 were attributed to work
performed by persons other than Wheeler Wasoff, P.C.'s full-time, permanent
employees.

                                    PART IV

ITEM 15. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (a)(2)  Financial Statements And Financial Statement Schedules

     INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                      INDEX


         Independent Auditor's Report........................................F-2

         Balance Sheets
                  August 31, 2003 and 2002...................................F-3

         Statements of Operations
                  Years Ended August 31, 2003, 2002, and 2001 and
                  Cumulative Amounts from Inception to August 31, 2003.......F-4

         Statements of Members'/ Stockholders' Equity
                  Period from Inception (May 31, 1996) to December 31,
                  1996, Eight Months Ended August 31, 1997 and
                  Years Ended August 31, 2000, 2001, 2002 and 2003.....F-5 - F-8

         Statements of Cash Flows
                  Years Ended August 31, 2003, 2002, and 2001 and
                  Cumulative Amounts from Inception
                  to August 31, 2003 .................................F-9 - F-10

         Notes to Financial Statements...............................F-11 - F-23

     All other schedules are omitted because the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the Financial Statements and Notes
thereto.

(a)(3) Exhibits.
       ---------

                                       37

<PAGE>


                                  Exhibit Index

Number   Description
------   -----------

3.1      Articles Of Incorporation filed with the Maryland Secretary Of State on
         June 18, 2001.(1)

3.2      Articles of Merger filed with the Maryland Secretary Of State on
         July 3, 2001 in connection with Maryland reincorporation.(1)

3.3      Bylaws(1)

31       Rule 13a - 14(a) Certifications of Chief Executive Officer and
         Chief Financial Officer

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

99.1     Employee Code of Conduct

99.2     Code of Ethics for Chief Executive Officer, Chief Financial Officer
         and Controller

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

(1)  Incorporated by reference from the Registrant's Form 10-K for the year
     ended August 31, 2001.

(b)  Reports On Form 8-K.
     --------------------

     During the fourth quarter of the fiscal year ended August 31, 2003, the
Company filed three Current Reports on Form 8-K, which reported events occurring
on each of June 20, 2003, July 14, 2003 and July 30, 2003.



                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                             PYR ENERGY CORPORATION



Date: December 15, 2003                       By:  /s/  D. Scott Singdahlsen
                                                   -----------------------------
                                                   D. Scott Singdahlsen
                                                   Chief Executive Officer

                                       38

<PAGE>


     In accordance with the requirements of the Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>


      Signatures                            Title                                   Date
----------------------      -------------------------------------------       -----------------

<S>                         <C>                                               <C>

/s/  D. Scott Singdahlsen   Chief Executive Officer, President, Chief         December 15, 2003
-------------------------   Financial Officer and Chairman Of The Board
D. Scott Singdahlsen

/s/  S. L. Hutchison        Director                                          December 15, 2003
-------------------------
S. L. Hutchison

                            Director
-------------------------
David Kilpatrick

/s/  Bryce W. Rhodes        Director                                          December 15, 2003
-------------------------
Bryce W. Rhodes
</TABLE>

                                       39
<PAGE>



                             PYR ENERGY CORPORATION
                          (A Development Stage Company)





                                      INDEX



   Independent Auditor's Report..............................................F-2

   Balance Sheets
            August 31, 2003 and 2002.........................................F-3

   Statements of Operations
            Years Ended August 31, 2003, 2002 and 2001 and
            Cumulative Amounts from Inception to August 31, 2003.............F-4

   Statements of Members'/ Stockholders' Equity
            Period from Inception (May 31, 1996) to
            December 31, 1996, Eight Months Ended August 31, 1997 and
            Six Years Ended August 31, 2003............................F-5 - F-8

   Statements of Cash Flows
            Years Ended August 31, 2003, 2002 and 2001 and
            Cumulative Amounts from Inception to August 31, 2003.......F-9 - F10

   Notes to Financial Statements.....................................F-11 - F-23


                                      F-1




<PAGE>


                          INDEPENDENT AUDITOR'S REPORT




To The Board of Directors and Stockholders
PYR ENERGY CORPORATION

We have audited the accompanying balance sheets of PYR Energy Corporation (a
development stage company) as of August 31, 2003 and 2002, and the related
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended August 31, 2003 and cumulative amounts from
inception to August 31, 2003. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PYR Energy Corporation as of
August 31, 2003 and 2002, and the results of its operations and its cash flows
for each of the three years in the period ended August 31, 2003 and cumulative
amounts from inception to August 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.




                                                  Wheeler Wasoff, P.C.

Denver, Colorado
November 25, 2003


                                      F-2


<PAGE>
<TABLE>
<CAPTION>


                                                PYR ENERGY CORPORATION
                                             (A Development Stage Company)
                                                     BALANCE SHEETS
                                              AUGUST 31, 2003 and 2002

                                                        ASSETS

                                                                                     2003                 2002
                                                                                     ----                 ----

<S>                                                                             <C>                   <C>
CURRENT ASSETS
   Cash                                                                         $  3,657,938           $  6,516,086
   Prepaid expenses                                                                   46,559                 47,365
                                                                                ------------           ------------

          Total Current Assets                                                     3,704,497              6,563,451

PROPERTY AND EQUIPMENT, net (Note 3)                                               5,317,150              6,805,355

OTHER                                                                                 68,257                 31,444
                                                                                ------------           ------------

                                                                                $  9,089,904           $ 13,400,250
                                                                                ============           ============


                                             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                     $    309,796           $    532,597
   Asset retirement obligation (Note 4)                                              727,231
                                                                                ------------           ------------


           Total Current Liabilities                                               1,037,027                532,597
                                                                                ------------           ------------

LONG-TERM LIABILITIES
   Convertible notes payable (Note 5)                                              6,303,975              6,000,000
   Asset retirement obligation (Note 4)                                              118,862
                                                                                ------------           ------------


        Total Long-Term Liabilities                                                6,422,837              6,000,000
                                                                                ------------           ------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value; authorized 1,000,000 shares
     Series A authorized 25,000 shares; issued and outstanding none                     --                     --
   Common stock, $.001 par value; authorized 75,000,000 shares
      Issued and outstanding 23,701,357 shares                                        23,701                 23,701
   Capital in excess of par value                                                 35,407,657             35,407,657
   Deficit accumulated during the development stage                              (33,801,318)           (28,563,705)
                                                                                ------------           ------------

                                                                                   1,630,040              6,867,653
                                                                                ------------           ------------

                                                                                $  9,089,904           $ 13,400,250
                                                                                ============           ============


                         The accompanying notes are an integral part of the financial statements.

                                                           F-3


<PAGE>


                                                 PYR ENERGY CORPORATION
                                               (A Development Stage Company)
                                                 STATEMENTS OF OPERATIONS


                                                                                                        Cumulative from
                                                                       Years ended August 31,            Inception to
                                                                                                           August 31,
                                                         2003              2002             2001              2003
                                                    ------------      ------------      ------------      ------------
REVENUES
   Oil and gas production                           $    195,167      $    132,569      $  1,201,979      $  1,529,715
                                                    ------------      ------------      ------------      ------------


                                                         195,167           132,569         1,201,979         1,529,715
                                                    ------------      ------------      ------------      ------------

OPERATING EXPENSES
   Lease operating expenses                               95,334            91,384           102,018           288,736
   Impairment, dry hole, and abandonments              3,234,029        11,722,830        13,339,911        28,818,139
   Depreciation and amortization                         239,393            14,605            17,823           337,994
   General and administrative                          1,265,912         1,496,329         1,306,635         6,560,336
                                                    ------------      ------------      ------------      ------------
                                                       4,834,668        13,325,148        14,766,387        36,005,205
                                                    ------------      ------------      ------------      ------------

(LOSS) FROM OPERATIONS                                (4,639,501)      (13,192,579)      (13,564,408)      (34,475,490)
                                                    ------------      ------------      ------------      ------------

OTHER INCOME (EXPENSE)
   Interest income                                        53,520           145,645           422,117           945,147
   Other income                                             --                --                --             127,528
   Interest (expense)                                   (310,457)          (82,894)             --            (577,657)
   Gain on sale of oil and gas prospects                    --                --                --             556,197
                                                    ------------      ------------      ------------      ------------
                                                        (256,937)           62,751           422,117         1,051,215
                                                    ------------      ------------      ------------      ------------

NET (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE                                             (4,896,438)      (13,129,828)      (13,142,291)      (33,424,275)
   Cumulative effect of change in
      accounting principle                              (341,175)             --                --            (341,175)
                                                    ------------      ------------      ------------      ------------

                                                       5,237,613       (13,129,828)      (13,142,291)      (33,765,450)

INCOME APPLICABLE TO
PREDECESSOR LLC (Note 1)                                    --                --                --             (35,868)
                                                    ------------      ------------      ------------      ------------


NET (LOSS)                                            (5,237,613)      (13,129,828)      (13,142,291)      (33,801,318)

   Less dividends on preferred stock                        --                --             (62,880)         (292,411)
                                                    ------------      ------------      ------------      ------------

NET (LOSS) TO COMMON STOCKHOLDERS                   $ (5,237,613)     $(13,129,828)     $(13,205,171)     $(34,093,729)
                                                    ============      ============      ============      ============

NET (LOSS) PER COMMON SHARE
BASIC AND DILUTED                                   $       (.22)     $       (.55)     $       (.59)     $      (2.23)
                                                    ============      ============      ============      ============

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
                                                      23,701,357        23,693,521        22,226,906        15,282,342
                                                    ============      ============      ============      ============


                  The accompanying notes are an integral part of the financial statements.

                                                     F-4


<PAGE>


                                                     PYR ENERGY CORPORATION
                                                  (A Development Stage Company)
                                            STATEMENTS OF MEMBERS'/STOCKHOLDERS' EQUITY
                                     PERIOD FROM INCEPTION (MAY 31, 1996) TO DECEMBER 31, 1996,
                                EIGHT MONTHS ENDED AUGUST 31, 1997 AND SIX YEARS ENDED AUGUST 31, 2003


                                                                                                                          Deficit
                                                    Preferred Stock               Common Stock                          Accumulated
                                                ------------------------    -----------------------      Capital in     During the
                                  Members'                                                                Excess of     Development
                                   Equity         Shares        Amount        Shares       Amount         Par Value        Stage
                                   ------         ------        ------        ------       ------         ---------        -----

Inception, May 31, 1996          $      --             --     $      --            --     $      --      $      --      $      --
Initial member contributions
  - cash                               5,000           --            --            --            --             --             --
Member contribution- services         12,000           --            --            --            --             --             --
Distributions to members             (24,000)          --            --            --            --             --             --
Net income                            18,963           --            --            --            --             --             --
                                 -----------   -----------   -----------   -----------    -----------    -----------    -----------

Balance, December 31, 1996            11,963           --            --            --            --             --             --
Member contributions - cash           23,000           --            --            --            --             --             --
Member contribution -  services       24,000           --            --            --            --             --             --
Distributions to members             (42,000)          --            --            --            --             --             --
Net income - January 1, 1997
  to August 5, 1997                   16,905           --            --            --            --             --             --
Issuance of common stock
  to members of PYR Energy,
  LLC upon merger ($.008
  per share)                         (33,868)          --            --       4,000,000         4,000         29,868           --
Recapitalization of shares
  issued by Mar prior to
  merger                                --             --            --       1,059,804         1,060           (724)          --
Sales of common stock
  pursuant to private
  placement at
  $.25 per share                        --             --            --       2,095,000         2,095        521,655           --
Sale of common stock
  pursuant to private
  placement at                          --             --
  $.75 per share                        --             --            --       2,000,000         2,000      1,498,000           --
Costs of private
  placements offerings                  --             --            --            --            --         (280,711)          --
Net (loss) August 6, 1997
  to August 31, 1997                    --             --            --            --            --             --          (57,825)
                                 -----------   -----------   -----------   -----------    -----------    -----------    -----------

Balance, August 31, 1997                --             --            --      9,154,804         9,155       (57,825)       1,768,088

Net (loss)                              --             --            --            --            --             --         (110,807)
                                 -----------   -----------   -----------   -----------    -----------    -----------    -----------

Balance, August 31, 1998         $      --             --     $      --       9,154,804   $     9,155    $ 1,768,088    $  (168,632)
                                 -----------   -----------   -----------   -----------    -----------    -----------    -----------





                               The accompanying notes are an integral part of the financial statements.

                                                                  F-5


<PAGE>


                                                         PYR ENERGY CORPORATION
                                                    (A Development Stage Company)
                                       STATEMENTS OF MEMBERS'/STOCKHOLDERS' EQUITY (continued)
                                      PERIOD FROM INCEPTION (MAY 31, 1996) TO DECEMBER 31, 1996,
                                EIGHT MONTHS ENDED AUGUST 31, 1997 AND SIX YEARS ENDED AUGUST 31, 2003


                                                                                                                         Deficit
                                                 Preferred Stock               Common Stock                            Accumulated
                                             ------------------------    -----------------------        Capital in     During the
                                                                                                         Excess of     Development
                                               Shares        Amount          Shares         Amount      Par Value         Stage
                                               ------        ------          ------         ------      ---------         -----

Balance Forward                                 --      $       --         9,154,804    $      9,155   $  1,768,088    $   (168,632)
Issuance of preferred stock for
  convertible notes                           25,000              25            --              --        2,499,976            --
Unamortized convertible note
  financing costs                               --              --              --              --          (73,319)           --
Issuance of common stock for
  interest on convertible debt,
   at $2.19 pershare                            --              --            53,326              53        116,769            --
Issuance of common stock warrants
  for financing costs                           --              --              --              --           56,833            --
Conversion of preferred stock to
  common stock at $.60 per share              (2,021)             (2)        336,833             337           (335)           --
Sale of common stock pursuant to
  private placement for cash of
  $1.60 per share                               --              --         4,375,000           4,375      6,995,625            --

Costs of private placement                      --              --              --              --          (83,155)           --
Exercise of private placement warrants
  for cash of $2.50 per share                   --              --             3,125               3          7,809            --
Issuance of common stock for
  property, valued at $.75 per
  share                                         --              --           266,666             267        199,733            --
Issuance of common stock for
  property, valued at $2.00 per
  share                                         --              --           218,866             219        437,513            --
Preferred dividends paid                        --              --              --              --          (50,910)           --

Net (loss)                                      --              --              --              --             --        (1,140,407)
                                        ------------    ------------    ------------    ------------   ------------    ------------


Balance August 31, 1999                       22,979    $         23      14,408,620    $     14,409   $ 11,874,627    $ (1,309,039)
                                        ------------    ------------    ------------    ------------   ------------    ------------


                            The accompanying notes are an integral part of the financial statements.

                                                             F-6



<PAGE>


                                                       PYR ENERGY CORPORATION
                                                   (A Development Stage Company)
                                    STATEMENTS OF MEMBERS'/STOCKHOLDERS' EQUITY (continued)
                                   PERIOD FROM INCEPTION (MAY 31, 1996) TO DECEMBER 31, 1996,
                             EIGHT MONTHS ENDED AUGUST 31, 1997 AND SIX YEARS ENDED AUGUST 31, 2003

                                                                                                                         Deficit
                                                Preferred Stock               Common Stock                              Accumulated
                                             ------------------------    -----------------------        Capital in      During the
                                                                                                        Excess of      Development
                                              Shares       Amount          Shares         Amount        Par Value         Stage
                                              ------       ------          ------         ------        ---------         -----

Balance Forward                              22,979    $         23      14,408,620    $     14,409    $ 11,874,627    $ (1,309,039)
Issuance of common stock for
  services (valued at $4.00
  per share)                                   --              --             5,000               5          19,995            --
Conversion of preferred stock to
  common stock
  at $.60 per share                          (8,716)             (9)      1,452,597           1,452          (1,443)           --
Exercise of warrants for cash
  of $.75 per share                            --              --            58,333              58          43,692            --
Exercise of private
  placement warrants for
  cash of $2.50 per share                      --              --           160,938             161         402,184            --
Issuance of common stock for
  payment of preferred
  dividends (valued at $4.30
  per share)                                   --              --            24,914              25             (25)           --
Issuance of common stock for
  payment of preferred
  dividends (valued at $5.24
  per share)                                   --              --            13,617              14             (14)           --
Sale of common stock pursuant to
  private placement for cash
  of $3.25 per share                           --              --           220,000             220         714,780            --
Cost of private placement                      --              --              --              --           (11,857)           --
Exercise of common
  stock options                                --              --            27,500              28          26,285            --
Retirement of common stock
  received for option exercise                 --              --            (2,500)             (3)        (10,310)           --
Sale of common stock pursuant to
  private placement for cash
  of $3.50 per share                           --              --         2,700,000           2,700       9,447,300            --
Issuance of common
  stock warrants for
  offering costs                               --              --              --              --           110,606            --
Costs of private placement                     --              --              --              --          (567,436)           --
Net (loss)                                     --              --              --              --              --          (982,547)
                                       ------------    ------------    ------------    ------------    ------------    ------------


Balance August 31, 2000                      14,263    $         14      19,069,019    $     19,069    $ 22,048,384    $ (2,291,586)
                                       ------------    ------------    ------------    ------------    ------------    ------------


                               The accompanying notes are an integral part of the financial statements.

                                                                  F-7


<PAGE>


                                                  PYR ENERGY CORPORATION
                                                (A Development Stage Company)
                                  STATEMENTS OF MEMBERS'/STOCKHOLDERS' EQUITY (continued)
                                 PERIOD FROM INCEPTION (MAY 31, 1996) TO DECEMBER 31, 1996,
                            EIGHT MONTHS ENDED AUGUST 31, 1997 AND SIX YEARS ENDED AUGUST 31, 2003

                                                                                                                         Deficit
                                                Preferred Stock               Common Stock                             Accumulated
                                             ------------------------    -----------------------        Capital in     During the
                                                                                                        Excess of     Development
                                             Shares        Amount          Shares         Amount        Par Value         Stage
                                              ------        ------          ------         ------       ---------         -----


Balance Forward                              14,263    $         14      19,069,019    $     19,069    $ 22,048,384    $ (2,291,586)
Conversion of preferred stock
  to common stock                           (14,263)            (14)      2,377,234           2,377          (2,363)           --
Exercise of warrants for cash
  of $.75 per share                            --              --           116,667             117          87,384            --
Exercise of private placement
  warrants for cash of
  $2.50 to $4.80 per
  share                                        --              --           439,723             439       1,469,226            --
Issuance of common stock
  for payment of
  preferred dividends
  (valued at $6.40 per
  share)                                       --              --             9,825              10             (10)           --
Exercise of common stock
  options for cash at $.69 to
  $3.66 per share                              --              --           246,000             246         288,272
Retirement of common stock
  received for option exercise                 --              --           (17,111)            (17)       (114,971)
Sale of common stock for cash
  of $8.00 per share                           --              --         1,450,000           1,450      11,598,550            --
Costs of common stock sale                     --              --              --              --          (160,470)           --
Net (loss)
                                               --              --              --              --              --       (13,142,291)
                                       ------------    ------------    ------------    ------------    ------------    ------------

Balance August 31, 2001                        --              --        23,691,357          23,691      35,214,002     (15,433,877)

Exercise of common
  stock options for cash
  at $1.50 per share                           --              --            10,000              10          14,990            --
Issuance of common stock
  warrants for services                        --              --              --              --           178,665            --

Net (loss)                                     --              --              --              --              --       (13,129,828)
                                       ------------    ------------    ------------    ------------    ------------    ------------

Balance August 31, 2002                        --              --        23,701,357          23,701      35,407,657     (28,563,705)


Net (loss)                                     --              --              --              --              --        (5,237,613)
                                       ------------    ------------    ------------    ------------    ------------    ------------

Balance August 31, 2003                        --      $       --        23,701,357    $     23,701    $ 35,407,657    $(33,801,318)
                                       ============    ============    ============    ============    ============    ============



                               The accompanying notes are an integral part of the financial statements.

                                                              F-8


<PAGE>


                                                          PYR ENERGY CORPORATION
                                                      (A Development Stage Company)
                                                         STATEMENTS OF CASH FLOWS
                                                                                                                   Cumulative
                                                                                                                   Amounts from
                                                                              Years Ended August 31,                Inception
                                                                        2003          2002             2001
                                                                        ----          ----             ----
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net (loss)                                                    $ (5,237,613)   $(13,129,828)   $ (13,142,29)   $(33,765,450)
    Adjustments to reconcile net (loss) to
      net cash (used) by operating activities
         Cumulative effect of change in accounting principle           341,175            --              --           341,175
         Depreciation and amortization                                 239,393          14,605          17,823         337,995
         Contributed services                                             --              --              --            36,000
         Gain on sale of oil and gas prospects                            --              --              --          (556,197)
         Impairment, dry hole and abandonments                       3,234,029      11,722,830      13,339,911      28,818,139
         Common stock issued for interest and services                    --              --              --           136,822
         Warrants issued for services                                     --           178,665            --           178,665
         Amortization of financing costs                                 3,187             867            --            30,993
         Amortization of marketable securities                            --              --              --           (20,263)
       Accrued interest converted into debt                            303,975            --              --           303,975
    Changes in assets and liabilities
        Decrease (increase) in accounts receivable                        --         1,173,751      (1,173,751)           (566)
        Decrease (increase) in prepaids                                    805          27,270         (53,801)        (51,112)
        (Decrease) increase in accounts payable                        (25,895)     (1,172,192)         22,303      (1,116,181)
        Other                                                          (40,000)         (6,916)          1,946         (38,721)
                                                                  ------------    ------------    ------------    ------------
    Net cash (used) by operating activities                         (1,180,944)     (1,190,948)       (987,860)     (5,364,726)
                                                                  ------------    ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Cash paid for furniture and equipment                               (6,261)        (11,293)        (30,757)       (138,466)
    Cash paid for oil and gas properties                            (1,670,943)     (8,325,204)    (11,329,468)    (32,482,642)
    Proceeds from sale of oil and gas properties                          --           250,000            --         1,300,078
    Cash paid for marketable securities                                   --              --              --        (5,090,799)
    Proceeds from sale of marketable securities                           --              --              --         5,111,062
    Cash received (paid) for reimbursable property costs                  --              --           381,605         (28,395)
                                                                  ------------    ------------    ------------    ------------
 Net cash (used) in investing activities                            (1,677,204)     (8,086,497)    (10,978,620)    (31,329,162)
                                                                  ------------    ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Members capital contributions                                        --              --              --            28,000
     Distributions to members                                             --              --              --           (66,000)
     Cash from short-term borrowings                                      --              --              --           285,000
     Repayment of short-term borrowings                                   --              --              --          (285,000)
     Cash received upon recapitalization and merger                       --              --              --               336
     Proceeds from sale of common stock                                   --              --        11,600,000      30,788,750
     Proceeds from sale of convertible debt                               --         6,000,000            --         8,500,001
     Proceeds from exercise of warrants                                   --              --         1,557,166       2,011,073
     Proceeds from exercise of options                                    --            15,000         173,530         204,530
     Cash paid for offering and financing costs                           --           (22,311)       (160,470)     (1,058,759)
     Payments on capital lease                                            --              --              (920)         (5,195)
     Preferred dividends paid                                             --              --              --           (50,910)
                                                                  ------------    ------------    ------------    ------------

  Net cash provided by financing activities                               --         5,992,689      13,169,306      40,351,826
                                                                  ------------    ------------    ------------    ------------

NET (DECREASE) INCREASE IN CASH                                     (2,858,148)     (3,284,756)      1,202,826       3,657,938
CASH, BEGINNING OF PERIODS                                           6,516,086       9,800,842       8,598,016            --
                                                                  ------------    ------------    ------------    ------------
CASH, END OF PERIODS                                              $  3,657,938    $  6,516,086    $  9,800,842    $  3,657,938
                                                                  ============    ============    ============    ============

                            The accompanying notes are an integral part of the financial statements.

                                                            F-9
</TABLE>


<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                      STATEMENTS OF CASH FLOWS (continued)
                 YEARS ENDED AUGUST 31, 2003, 2002 and 2001 and
                    PERIOD FROM INCEPTION TO AUGUST 31, 2003


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     During the years ended August 31, 2003, 2002 and 2001, the Company made no
     cash payments for interest.

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     During the year ended August 31, 2002, the Company issued warrants, valued
     at $178,665, in conjunction with a financial advisory services agreement.

     During the year ended August 31, 2001, the Company issued 9,825 shares of
     common stock as payment of dividends on preferred stock.

     During the year ended August 31, 2000, the Company issued common stock,
     valued at $20,000, for services; issued warrants, valued at $110,606, as
     partial consideration for a finders fee in connection with a private
     placement sale of common stock; and issued 38,531 shares of common stock as
     payment of dividends on preferred stock.

     During the year ended August 31, 1999, the Company issued common stock,
     valued at $637,732, as partial consideration for oil and gas properties;
     issued common stock, valued at $116,822 for interest on convertible debt;
     and issued warrants, valued at $56,833, as partial consideration for a
     finders fee in connection with the sale of convertible debt.

     During the year ended August 31, 1998, the Company entered into a capital
     lease obligation of $5,195 for office equipment.

     During 1996 and 1997 the President of the Company performed services for
     PYR LLC valued at $12,000 and $24,000, respectively. The value of these
     services was charged to members' equity as a non-cash capital contribution.

     In August 1997, 4,000,000 shares of common stock were issued to the members
     of PYR Energy, LLC ("PYR LLC") in exchange for 100 percent of the ownership
     interests in PYR LLC, for which the net members' equity in PYR LLC was
     $33,868. These shares were issued pursuant to a plan of reorganization and
     merger effective August 6, 1997 (Note 1).










    The accompanying notes are an integral part of the financial statements.

                                      F-10


<PAGE>


                             PYR ENERGY CORPORATION
                         (A Development Stage Company)
                         Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION AND BUSINESS

     PYR Energy Corporation (the "Company") is an independent oil and gas
     company primarily engaged in the exploration for, acquisition, development
     and production of, crude oil and natural gas. The Company's current
     activities are principally conducted in the State of California and the
     Rocky Mountain region of the United States. As of August 31, 2003, the
     Company is considered a development stage company as defined by Statement
     of Financial Accounting Standards No. 7 (SFAS 7).

     The Company's predecessor, Mar Ventures Inc. ("Mar"), was incorporated
     under the laws of the State of Delaware on March 27, 1996 for the purpose
     of producing and marketing traditional television programming and marketing
     its film library. Mar was a public company which had no significant
     operations as of July 31, 1997. On August 6, 1997 Mar acquired all the
     interests in PYR Energy LLC ("PYR LLC") (a Colorado limited liability
     company organized on May 31, 1996), a development stage company as defined
     by SFAS No. 7. PYR LLC, an independent exploration company, was engaged in
     the acquisition of oil and gas properties for exploration and exploitation
     in the Rocky Mountain region and California. Effective August 6, 1997, Mar
     transferred to its former president substantially all its assets and
     liabilities that were related to its film library operations.

     Upon completion of the acquisition of PYR LLC by Mar, PYR LLC ceased to
     exist as a separate entity. Mar remained as the legal surviving entity and,
     effective November 12, 1997, Mar changed its name to PYR Energy
     Corporation. For financial reporting purposes, the business combination was
     accounted for as an additional capitalization of Mar (a reverse acquisition
     with PYR LLC as the acquirer). The operations of PYR LLC are the only
     continuing operations of the Company. Effective July 2, 2001, the Company
     was reincorporated in Maryland through the merger of the Company into a
     wholly owned subsidiary, PYR Energy Corporation, a Maryland corporation

     The Company is an exploration stage oil and gas company. The Company's
     efforts, since August 1997, have consisted of financing activities and the
     acquisition of unproven properties and related seismic data. The Company
     has entered into participation and farm-in agreements with industry
     partners on certain of its properties pursuant to which these partners have
     acquired, for cash, interests in the Company's properties. During the year
     ended August 31, 1998, drilling of two test wells was commenced, with one
     well being plugged and abandoned and the other suffering a blowout. During
     the years ended August 31, 1999 and 2000, the Company continued its
     acquisition of unproven properties and related seismic data with industry
     partners, and participated in exploration of the properties, including the
     drilling of exploratory wells. During the year ended August 31, 2001,
     initial production of oil and gas commenced from the Company's East Lost
     Hills prospect. Although initial production resulted in test revenue from
     oil and gas sales of $1,201,979 being earned through August 31, 2001, a
     reserve report prepared as of August 31, 2001 by an independent petroleum
     engineering firm concluded that reserves from the Company's producing
     properties were not economic to produce. (See Note 3). Accordingly, based
     on the ceiling test limitation required for oil and gas companies utilizing
     the full cost method of accounting, the Company recognized an impairment of
     $13,339,911 on its oil and gas properties at August 31, 2001.

     PROPERTY AND EQUIPMENT

     Furniture and equipment is recorded at cost. Depreciation and amortization
     of assets is provided by use of the straight-line method over the estimated
     useful lives of the related assets of three to five years. Expenditures for
     replacements, renewals, and betterments are capitalized. Maintenance and
     repairs are charged to operations as incurred. Long-lived assets, other
     than oil and gas properties, are evaluated for impairment to determine if
     current circumstances and market conditions indicate the carrying amount
     may not be recoverable. The Company has not recognized any impairment
     losses on non oil and gas long-lived assets.

                                      F-11



<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     OIL AND GAS PROPERTIES

     The Company utilizes the full cost method of accounting for oil and gas
     activities. Under this method, subject to a limitation based on estimated
     value, all costs associated with property acquisition, exploration and
     development, including costs of unsuccessful exploration, are capitalized
     within a cost center. The Company's oil and gas properties are located
     within the United States, which constitutes one cost center. No gain or
     loss is recognized upon the sale or abandonment of undeveloped or producing
     oil and gas properties unless the sale represents a significant portion of
     oil and gas properties and the gain significantly alters the relationship
     between capitalized costs and proved oil and gas reserves of the cost
     center. Depreciation, depletion and amortization of oil and gas properties
     is computed on the units of production method based on proved reserves.
     Amortizable costs include estimates of future development costs of proved
     undeveloped reserves. A reserve report prepared as of August 31, 2001 by an
     independent petroleum engineering firm concluded that reserves from the
     Company's producing properties were not economic to produce and, therefore,
     at August 31, 2001, the Company had no proved reserves. The Company has not
     established additional production as of August 31, 2003 and, accordingly,
     did not prepare a reserve report.

     Capitalized costs of oil and gas properties may not exceed an amount equal
     to the present value, discounted at 10%, of the estimated future net cash
     flows from proved oil and gas reserves plus the cost, or estimated fair
     market value, if lower, of unproved properties. Should capitalized costs
     exceed this ceiling, an impairment is recognized. The present value of
     estimated future net cash flows is computed by applying year end prices of
     oil and natural gas to estimated future production of proved oil and gas
     reserves as of year end, less estimated future expenditures to be incurred
     in developing and producing the proved reserves and assuming continuation
     of existing economic conditions. A reserve is provided for estimated future
     costs of site restoration, dismantlement and abandonment activities, net of
     residual salvage value, as a component of impairment, dry holes and
     abandonment expense.

     The Company leases non-producing acreage for its exploration and
     development activities. The cost of these leases is included in unevaluated
     oil and gas property costs recorded at the lower of cost or fair market
     value.

     REVENUE RECOGNITION

     The Company recognizes oil and gas revenues from its interests in producing
     wells as oil and gas is produced and sold from these wells. The Company has
     no gas balancing arrangements in place. Oil and gas sold is not
     significantly different from the Company's product entitlement.

     INCOME TAXES

     The Company has adopted the provisions of SFAS 109, "Accounting for Income
     Taxes". SFAS 109 requires recognition of deferred tax liabilities and
     assets for the expected future tax consequences of events that have been
     included in the financial statements or tax returns. Under this method,
     deferred tax liabilities and assets are determined based on the difference
     between the financial statement and tax basis of assets and liabilities
     using enacted tax rates in effect for the year in which the differences are
     expected to reverse.

     At August 31, 2003, the Company had a net operating loss carryforward of
     approximately $29,000,000 that may be offset against future taxable income
     through 2023. These carryforwards are subject to review by the Internal
     Revenue Service.

     The Company has fully reserved the $6,300,000 tax benefit of operating loss
     carryforwards, by a valuation allowance of the same amount, because the
     likelihood of realization of the tax benefit cannot be determined. Of the
     total tax benefit, $595,000 is attributable to 2003.

                                      F-12


<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Temporary differences between the time of reporting certain items for
     financial and tax reporting purposes consist primarily of exploration and
     development costs on oil and gas properties, and impairment pursuant to the
     ceiling test limitation.

     USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and reported amounts of revenues and expenses during
     the reporting period. Actual results could differ from those estimates.

     The oil and gas industry is subject, by its nature, to environmental
     hazards and clean-up costs. At this time, management knows of no
     substantial costs from environmental accidents or events for which it may
     be currently liable. In addition, the Company's oil and gas business makes
     it vulnerable to changes in wellhead prices of crude oil and natural gas.
     Such prices have been volatile in the past and can be expected to be
     volatile in the future. By definition, proved reserves are based on current
     oil and gas prices and estimated reserves. Price declines reduce the
     estimated quantity of proved reserves and increase annual amortization
     expense (which is based on proved reserves).

     (LOSS) PER SHARE

     (Loss) per common share is computed based on the weighted average number of
     common shares outstanding during each period. Common shares issued to the
     members of PYR LLC upon completion of the merger are considered outstanding
     for all periods presented. Convertible equity instruments, such as
     convertible notes payable, stock options and warrants, are not considered
     in the calculation of net loss per share as their inclusion would be
     antidilutive.

     SHARE BASED COMPENSATION

     In October 1995, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 123, Accounting for Stock-Based
     Compensation (SFAS 123), effective for fiscal years beginning after
     December 15, 1995. This statement defines a fair value method of accounting
     for employee stock options and encourages entities to adopt that method of
     accounting for its stock compensation plans. SFAS 123 allows an entity to
     continue to measure compensation costs for these plans using the intrinsic
     value based method of accounting as prescribed in Accounting Pronouncement
     Bulletin Opinion No. 25, Accounting for Stock Issued to Employees (APB 25).
     The Company has elected to continue to account for its employee stock
     compensation plans as prescribed under APB 25. Had compensation cost for
     the Company's stock-based compensation plans been determined based on the
     fair value at the grant dates for awards under those plans consistent with
     the method prescribed in SFAS 123, the Company's net (loss) and (loss) per
     share for the years ended August 31, 2003, 2002 and 2001 would have been
     increased to the pro forma amounts indicated below:

                                    2003              2002              2001
                                    ----              ----              ----
          Net (loss):
             As reported      $  (5,237,613)   $  (13,129,828)   $  (13,205,171)
             Pro forma           (5,948,778)      (13,995,781)      (13,632,412)

          (Loss) per share:
             As reported      $        (.22)   $         (.55)   $         (.59)
             Pro forma                 (.25)             (.59)             (.61)

                                      F-13


<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     CASH EQUIVALENTS

     For purposes of reporting cash flows, the Company considers as cash
     equivalents all highly liquid investments with a maturity of three months
     or less at the time of purchase. On occasion, the Company has cash in banks
     in excess of federally insured amounts. See below, "Concentration of Credit
     Risks".

     RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
     146, "Accounting for Costs Associated with Exit or Disposal Activities".
     SFAS 146 addresses financial accounting and reporting for costs associated
     with exit or disposal activities and nullifies Emerging Issues Task Force
     Issue No. 94-3, "Liability Recognition for Certain Employee Termination
     Benefits and Other Costs to Exit an Activity". SFAS 146 generally requires
     a liability for a cost associated with an exit or disposal activity to be
     recognized and measured initially at its fair value in the period in which
     the liability is incurred. The pronouncement is effective for exit or
     disposal activities initiated after December 31, 2002. The Company does not
     believe the adoption of SFAS 146 will have any impact on its financial
     position or results of operations,

     SFAS 147, "Acquisitions of Certain Financial Institutions," was issued in
     December 2002 and is not expected to apply to the Company's current or
     planned activities.

     In December 2002, the FASB approved SFAS 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure - an amendment of FASB Statement
     123." SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation",
     to provide alternative methods of transition for a voluntary change to the
     fair value based method of accounting for stock-based employee
     compensation. In addition, SFAS 148 amends the disclosure requirements of
     SFAS 123 to require prominent disclosures in both annual and interim
     financial statements about the method of accounting for stock-based
     employee compensation and the effect of the method used on reported
     results. SFAS 148 is effective for financial statements for fiscal years
     ending after December 15, 2002. The Company will continue to account for
     stock based compensation using the methods detailed in the stock-based
     compensation accounting policy.

     In April 2003, the FASB approved SFAS 149, "Amendment of Statement 133 on
     Derivative Instruments and Hedging Activities". SFAS 149 is not expected to
     apply to the Company's current or planned activities.

     In June 2003, the FASB approved SFAS 150, "Accounting for Certain Financial
     Instruments with Characteristics of both Liabilities and Equity". SFAS 150
     establishes standards for how an issuer classifies and measures certain
     financial instruments with characteristics of both liabilities and equity.
     This Statement is effective for financial instruments entered into or
     modified after May 31, 2003, and otherwise is effective at the beginning of
     the first interim period beginning after June 15, 2003. SFAS 150 is not
     expected to have an effect on the Company's financial position.

     FAIR VALUE

     The carrying amount reported in the balance sheet for cash, prepaid
     expenses, accounts payable and accrued liabilities approximates fair value
     because of the immediate or short-term maturity of these financial
     instruments.

                                      F-14


<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     CONCENTRATION OF CREDIT RISK

     Financial instruments which potentially subject the Company to
     concentrations of credit risk consist of cash and receivables. The Company
     maintains cash accounts at one financial institution. The Company
     periodically evaluates the credit worthiness of financial institutions, and
     maintains cash accounts only in large high quality financial institutions,
     thereby minimizing exposure for deposits in excess of federally insured
     amounts. The Company believes that credit risk associated cash is remote.

     RECLASSIFICATION

     Certain reclassifications have been made to 2002 and 2001 amounts to
     conform to the 2003 presentation.

NOTE 2 - ACCOUNTS PAYABLE

     During the year ended August 31, 2003 all revenues earned from oil and gas
     sales were offset against amounts due to the operator of the producing
     properties for cash calls and operating expenditures.

     Accounts payable and accrued liabilities at August 31, 2003 and 2002 are as
     follows:

                                             2003              2002
                                             ----              ----

         Due to operators                  $ 83,456          $339,475
         Trade payables                      71,985            49,132
         Ad Valorem Tax                      69,034
                                                               61,963
         Accrued interest                    85,321            82,027
                                           --------          --------

                                           $309,796          $532,597
                                           ========          ========


NOTE 3 - PROPERTY AND EQUIPMENT

     Property and equipment at August 31, 2003 and 2002 consisted of the
     following:

                                                       2003             2002
                                                       ----             ----

         Oil and gas properties, full cost method
           Unevaluated costs, not subject
             to amortization or ceiling test       $  5,011,121    $  6,771,111
           Evaluated costs                           29,411,814      25,547,971
         Furniture and equipment                        128,165         121,904
                                                   ------------    ------------

                                                     34,551,100      32,440,986

         Less accumulated depreciation,
           amortization, and impairment             (29,233,950)    (25,635,631)
                                                   ------------    ------------

                                                   $  5,317,150    $  6,805,355
                                                   ============    ============

                                      F-15

<PAGE>



                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 3 - PROPERTY AND EQUIPMENT (continued)

     Information relating to the Company's costs incurred in its oil and gas
     operations during the years ended August 31, 2003, 2002, and 2001 is
     summarized as follows:

                                           2003           2002           2001
                                           ----           ----           ----

         Property acquisition costs,
           unproved properties         $   867,276    $ 1,790,820    $ 4,114,449
         Exploration costs                 139,117      1,519,819      2,448,990
         Development costs                 467,644      4,455,986      6,460,201
                                       -----------    -----------    -----------

                                       $ 1,474,037    $ 7,766,625    $13,023,640
                                       ===========    ===========    ===========

     Property acquisition costs include costs incurred to purchase, lease, or
     otherwise acquire a property. Exploration costs include the costs of
     geological and geophysical activity, and drilling and equipping exploratory
     wells. The Company reviews and determines the cost basis of drilling
     prospects on a drilling location basis.

     During the years ended August 31, 2003 and 2002, the Company participated
     in ongoing drilling operations at East Lost Hills and continued to refine
     seismic data and obtain the rights for additional exploration acreage in
     its other California and Rocky Mountain projects. Due to the uncertainty of
     whether additional activity will occur at its East Lost Hills project, and
     because of the uncertainty as to whether the Company will participate
     should additional activity occur, the Company has recognized impairment
     expense equal to its total investment in East Lost Hills. For the years
     ended August 31, 2003, 2002 and 2001, impairment expense for East Lost
     Hills was $451,285, $11,560,212 and $10,630,499, respectively; and
     impairment expense for the Company's undeveloped properties was $2,782,744,
     $162,618, and $2,709,412, respectively.

     For the years ended August 31, 2003, 2002 and 2001, accumulated charges to
     impairment of the Company's oil and gas prospects were $28,694,129,
     $25,547,970 and $13,825,140, respectively.

     During the year ended August 31, 2001 the Company earned its initial
     revenues from oil and gas producing activities from the East Lost Hills
     project. A reserve report prepared as of August 31, 2001 by an independent
     engineering firm concluded the reserves for the Company's producing
     properties were not economic to produce. Therefore, the Company recorded an
     impairment based upon the ceiling test limitation. It is uncertain whether
     additional activity will occur at its East Lost Hills project and it is
     uncertain whether the Company would participate should additional activity
     occur.

     Depreciation expense for the years ended August 31, 2003, 2002 and 2001 was
     $239,393, $14,605 and $17,823, respectively. Depreciation expense for the
     year ended August 31, 2003 included depreciation of assets recognized in
     accordance with the Asset Retirement Obligation calculation. See Note 4.

     At August 31, 2003, the Company had a 12.1193% interest in East Lost Hills.

NOTE 4 - ASSET RETIREMENT OBLIGATIONS

     In 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
     Obligations." SFAS 143 addresses financial accounting and reporting for
     obligations associated with the retirement of tangible long-lived assets
     and the associated asset retirement costs. This statement requires
     companies to record the present value of obligations associated with the
     retirement of tangible long-lived assets in the period in which it is
     incurred. The liability is capitalized as part of the related long-lived
     asset's carrying amount. Over time, accretion of the liability is
     recognized as an operating expense and the capitalized cost is depreciated
     over the expected useful life of the related asset. The Company's asset
     retirement obligations relate primarily to the plugging, dismantlement,

                                      F-16




<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 4 - ASSET RETIREMENT OBLIGATIONS (continued)

     removal, site reclamation and similar activities of its oil and gas
     properties. Prior to adoption of this statement, such obligations were
     accrued ratably over the productive lives of the assets through its
     depreciation, depletion and amortization for oil and gas properties without
     recording a separate liability for such amounts.

     The transition adjustment related to adopting SFAS 143 on September 1, 2002
     was recognized as a cumulative effect of a change in accounting principle.
     The cumulative effect on net income of adopting SFAS No. 143 was a net
     unfavorable effect of $341,175. At the time of adoption, total assets
     increased $629,816, and total liabilities increased $769,175. The amounts
     recognized upon adoption are based upon numerous estimates and assumptions,
     including future retirement costs, future recoverable quantities of oil and
     gas, future inflation rates and the credit-adjusted risk-free interest
     rate. Changes in asset retirement obligations during the year were:

         Asset retirement obligations as of September 1, 2002       $ 769,175
         Liabilities incurred                                            --
         Liabilities settled                                             --
         Accretion expense (included in depreciation)                  76,918
                                                                    ---------

         Asset retirement obligations as of August 31, 2003           846,093
         Less current portion                                        (727,231)
                                                                    ---------
         Long-term portion                                          $ 118,862
                                                                    =========

NOTE 5 - CONVERTIBLE NOTES PAYABLE

     In May 2002, the Company completed the sale of $6,000,000, 4.99%
     convertible promissory notes, due May 2009. The notes are convertible,
     together with accrued interest, into shares of the Company's common stock
     at the rate of $1.30 per share, at the option of the holder. No beneficial
     interest has been accrued to the notes, as the conversion price
     approximates the fair market value of the common shares as of the
     transaction date. Interest is payable semiannually in May and November.

     At the option of the Company, accrued interest can be paid in cash or added
     to the principal amount of the notes. At November 24, 2002 and May 24, 2003
     the Company elected to add accrued interest of $151, 751 and $152,224,
     respectively, to the balance of the notes. As of August 31, 2003 the
     balance of the notes is $6,303,975.

NOTE 6 - STOCKHOLDERS' EQUITY

     PREFERRED STOCK

     In April 1999, the stockholders of the Company approved an amendment to the
     Certificate of Incorporation pursuant to which the Company was authorized
     to issue 1,000,000 shares of preferred stock, with a par value of $.001 per
     share. The Board of Directors authorized the designation of a "Series A
     Preferred Stock," consisting of 25,000 shares, face value of $100 per share
     and a 10% cumulative dividend payable in cash or shares of common stock on
     January 1 and July 1 of each year. Holders of Series A Preferred Stock
     receive preference in the event of any liquidation, dissolution or winding
     up of the Company. The shares of Series A Preferred Stock were convertible
     into shares of common stock of the Company at an initial conversion price
     of $.60 per share. No beneficial interest has been accrued to the preferred
     stockholders as the conversion price of $.60 per share was substantially in
     excess of the fair market value of the common shares as of the transaction
     date.

     In April 1999, the holders of $2,500,000 of 10% convertible notes, due
     October 1999, converted the notes to 25,000 shares of Series A Preferred
     Stock. As of August 31, 2001, all shares of Series A Preferred Stock were
     converted to 4,166,664 shares of common stock at the initial conversion
     price of $.60 per share.

                                      F-17



<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 6 - STOCKHOLDERS' EQUITY (continued)

     COMMON STOCK

     Effective August 6, 1997, Mar completed a merger with PYR LLC (Note 1). In
     conjunction with the merger, the members of PYR LLC received 4,000,000
     shares of common stock of Mar. These shares were recorded at the net
     members' equity of PYR LLC as of that date of $33,868. The 1,059,804 Mar
     shares outstanding as of the date of merger were recapitalized to the net
     assets of Mar of $336. For financial statement reporting purposes, this
     transaction was treated as a reverse acquisition whereby PYR LLC was
     considered the surviving and reporting entity. For legal purposes, however,
     Mar remained as the surviving entity; therefore, the capital structure of
     the Company was accordingly restated.

     In July 1997, the Company completed the sale of common stock and warrants
     pursuant to a private placement as follows:

     o    2,095,000 units, at a price of $.25 per unit, consisting of 2,095,000
          shares of common stock, warrants to purchase 1,047,500 shares of
          common stock at an exercise price of $1.25 per share before October
          31, 1997, and warrants to purchase 1,047,500 shares of common stock at
          an exercise price of $1.75 per share before January 31, 1998.
          Subsequent to the offering, each of the warrant expiration dates was
          extended one or more times, and all the warrants ultimately expired
          without having been exercised.

     In August 1997, the Company completed the sale of common stock and warrants
     pursuant to a private placement as follows:

     o    2,000,000 units, at a price of $.75 per unit, consisting of 2,000,000
          shares of common stock, warrants to purchase 1,000,000 shares of
          common stock at an exercise price of $1.25 per share before October
          31, 1997, and warrants to purchase 1,000,000 shares of common stock at
          an exercise price of $1.75 per share before January 31, 1998.
          Subsequent to the offering, each of the warrant expiration dates was
          extended one or more times, and all the warrants ultimately expired
          without having been exercised.

     Proceeds from these offerings were $523,750 and $1,500,000, respectively,
     before costs of the offerings of $280,711.

     In May 1999, the Company completed the sale of 437,500 units of common
     stock and warrants pursuant to a private placement at a price of $16 per
     unit. Each unit consisted of 10 shares of common stock and one warrant to
     purchase one share of common stock at an exercise price of $2.50 per share
     for a period of five years. The Company may repurchase the warrants for
     $.001 per warrant at any time after the weighted average trading price of
     the Company's common stock has been at least $6.00 per share for a 45-day
     period. Proceeds from the offering were $7,000,000, before costs of the
     offering of $83,155.

     During the year ended August 31, 1999, the Company issued shares of common
     stock, valued at the non-discounted trading market price as of the date of
     the transaction, in conjunction with the assignment to the Company of
     certain undeveloped oil and gas prospects located in California as follows:

     o    266,666 shares, valued at $.75 per share, as full consideration for
          property received.
     o    218,866 shares, valued at $2.00 per share, as partial consideration
          for property received.

     In April 1999, the Company issued 53,326 shares of common stock for accrued
     interest on convertible notes of $116,822. The shares issued were valued at
     $2.19 per share, the non-discounted trading price of the Company's common
     stock at the transaction date.

                                      F-18



<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 6 - STOCKHOLDERS' EQUITY (continued)

     In May 2000, the Company completed the sale of 22,000 units of common stock
     and warrants pursuant to a private placement at a price of $32.50 per unit.
     Each unit consisted of 10 shares of common stock and one warrant to
     purchase one share of common stock at an exercise price of $4.25 per share
     for a period of three years. The Company may repurchase the warrants for
     $.001 per warrant at any time after the weighted average trading price of
     the Company's common stock has been at least $7.50 per share for a 30 day
     period. Proceeds from the offering were $715,000, before costs of the
     offering of $11,857.

     In August 2000, the Company completed the sale of 540,000 units of common
     stock and warrants pursuant to a private placement at a price of $17.50 per
     unit. Each unit consisted of five shares of common stock and one warrant to
     purchase one share of common stock at an exercise price of $4.80 per share
     for a period of three years. The Company may repurchase the warrants for
     $.001 per warrant at any time after the weighted average trading price of
     the Company's common stock has been at least $10.00 per share for a 30 day
     period. Proceeds from the offering were $9,450,000, before costs of the
     offering of $567,436, which included warrants valued at $110,606.

     During the year ended August 31, 2000, the Company issued 5,000 shares of
     common stock for services, valued at the non-discounted trading market
     price as of the date of the transaction of $20,000 ($4.00 per share).

     During the year ended August 31, 2001, the Company sold 1,450,000 shares of
     common stock pursuant to a shelf registration at a price of $8.00 per
     share. Proceeds from the offering were $11,600,000 before costs of
     $160,470.

     During the year ended August 31, 2002, options to acquire 10,000 shares of
     common stock, at $1.50 per share, were exercised.

     WARRANTS

     In May 2002, the Company issued warrants to purchase 200,000 shares of
     common stock at an exercise price of $1.49 per share through May 8, 2007,
     as partial consideration for a financial advisory services agreement. The
     warrants are valued at $178,665, based on the Black-Scholes option pricing
     model, and this amount was included in general and administrative expenses
     for the year ended August 31, 2002.

     At August 31, 2003, the status of outstanding warrants is as follows:

           Issue             Shares             Exercise           Expiration
           Date            Exercisable            Price               Date
           ----            -----------            -----               ----

        May 9, 2002          200,000              $1.49           May 8, 2007

     At August 31, 2003, the weighted average remaining contractual life of
     outstanding warrants was 3.7 years.

NOTE 7 - STOCK OPTION PLAN

     Under two stock option plans, options to purchase common stock may be
     granted until 2010. Stock options are granted to employees at exercise
     prices equal to the fair market value of the Company's stock at the dates
     of grants. Generally, options vest 1/3 each year for a period of three
     years from grant date and can have a maximum term of up to 10 years.
     Options are issued to key employees and other persons who contribute to the
     success of the Company. The Company has reserved 2,500,000 shares of common
     stock for these plans. At August 31, 2003 and 2002, options to purchase 0
     and 825,000 shares, respectively, were available to be granted pursuant to
     the stock option plans.

                                      F-19

<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 7 - STOCK OPTION PLAN (continued)

     The status of outstanding options granted pursuant to the plans are as
     follows:

<TABLE>
<CAPTION>


                                                    Number of           Weighted Avg.       Weighted Avg.
                                                     Shares             Exercise Price        Fair Value
                                                     ------             --------------        ----------

<S>                                                <C>                     <C>                <C>
Options Outstanding - September 1, 2000             1,172,500               $   2.12           $   1.26
(447,500 exercisable)
Granted                                               300,000               $   6.10           $   3.66
Exercised                                            (246,000)              $   1.17
                                                    ---------

Options Outstanding - August 31, 2001               1,226,500               $   3.31           $   1.94
(537,333 exercisable)
Granted                                               315,000               $   1.66           $   1.18
Exercised                                             (10,000)              $   1.50
Expired                                              (140,000)              $   2.57
                                                    ---------

Options Outstanding - August 31, 2002
(858,165 exercisable)                               1,391,500               $   3.03           $   1.90
Granted                                               940,000               $    .70           $    .22

Exercised                                                --                  --                 --
Expired                                              (115,000)              $   2.41
                                                    ---------

Options Outstanding - August 31, 2003
(1,031,498 exercisable)                             2,216,500               $   2.07           $   1.23
                                                    =========
</TABLE>


     The calculated value of stock options granted under these plans, following
     calculation methods prescribed by SFAS 123, uses the Black-Scholes stock
     option pricing model with the following assumptions used:

                                            2003          2002           2001
                                            ----          ----           ----

        Expected option life-years            7              5             5
        Risk-free interest rate             3.0%         4.375%         5.75%
        Dividend yield                        0              0             0
        Volatility                          107%         82-89%        68-75%

     At August 31, 2003, the number of options exercisable was 1,031,498 the
     weighted average exercise price of these options was $2.99, the weighted
     average remaining contractual life of the options was 1.6 years and the
     exercise price was $.69 to $8.63 per share.

     NOTE 8 - COMMITMENTS AND CONTINGENCIES

     The Company has entered into a non-cancelable lease, as amended, for office
     facilities. Minimum payments due under this lease are as follows:

               Year ending August 31, 2004             $97,723

                                      F-20


<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 8 - COMMITMENTS AND CONTINGENCIES (continued)

     Rent expense was $99,746, $98,415, and $58,988 for the years ended August
     31, 2003, 2002, and 2001, respectively.

     In conjunction with the Company's working interests in undeveloped oil and
     gas prospects, the Company must pay approximately $560,650 in delay rentals
     and other costs during the fiscal year ending August 31, 2004 to maintain
     the right to explore these prospects.

     The Company may be subject to various possible contingencies which are
     derived primarily from interpretations of federal and state laws and
     regulations affecting the oil and gas industry. Although management
     believes it has complied with the various laws and regulations, new rulings
     and interpretations may require the Company to make adjustments.

NOTE 9 - SEGMENT REPORTING

     In June 1997, SFAS 131, "Disclosure about Segments of an Enterprise and
     Related Information", was issued, which amends the requirements for a
     public enterprise to report financial and descriptive information about its
     reportable operating segments. Operating segments, as defined in the
     pronouncement, are components of an enterprise about which separate
     financial information is available and that are evaluated regularly by the
     Company in deciding how to allocate resources and in assessing performance.
     The financial information is required to be reported on the basis that is
     used internally for evaluating segment performance and deciding how to
     allocate resources to segments.

     The Company has one reportable segment, oil and gas exploration and
     production. The Company has concentrated its oil and gas acquisition and
     exploration activities in the western United States, primarily in
     California and the Rocky Mountain region. All significant activities in
     this segment have been with industry partners.

     During 2001, initial production commenced on the Company's East Lost Hills
     Prospect in California, and production continued through 2003. Results of
     operations for oil and gas operations in 2003, 2002 and 2001 are as
     follows:
<TABLE>
<CAPTION>

                                                   2003            2002           2001
                                                   ----            ----           ----

<S>                                           <C>               <C>              <C>
         Revenues
           Oil and gas sales                  $    195,167    $    132,569    $  1,201,979
                                              ------------    ------------    ------------

         Expense
           Lease operating expense                  83,618          91,384          40,055
           Ad Valorem Taxes                         11,716            --            61,963
           Impairment                            3,234,029      11,722,830      13,339,911
                                              ------------    ------------    ------------

                                                 3,329,363      11,814,214      13,441,929
                                              ------------    ------------    ------------

         (Loss) from oil and gas operations   $ (3,134,196)   $(11,681,645)   $(12,239,950)
                                              ============    ============    ============

     All sales of oil and gas were made to one customer.

     No depletion has been recorded on oil and gas properties. The Company
     recorded impairments against its entire amortizable full cost pool as of
     August 31, 2003, 2002 and 2001 and accordingly, had no costs to amortize.
     (See Note 3).

                                      F-21

<PAGE>


                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements


NOTE 10 - COMPREHENSIVE INCOME

     There are no adjustments necessary to net (loss) as presented in the
     accompanying statements of operations to derive comprehensive income in
     accordance with SFAS 130, "Reporting Comprehensive Income."

NOTE 11 - QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following is a summary of the unaudited financial data for each quarter
     for the years ended August 31, 2002, 2001 and 2000:

                                                                                Three Months Ended
2003                                                     11/30/02            2/28/03           5/31/03           8/31/03
----                                                     --------            -------           -------           -------

Revenues                                              $    68,290        $    60,583        $    54,085        $    65,728
                                                      -----------        -----------        -----------        -----------

Operating expenses
    Lease operating expenses                               21,037             25,308             18,349             30,640
    Impairment, dry hole and abandonments                 479,668            698,599               --            2,055,762
    Depreciation and amortization                           3,086              2,786              3,020            230,501
    General and administrative                            325,306            345,237            339,576            255,792
    Interest                                               75,566             76,489             78,316             80,086
                                                      -----------        -----------        -----------        -----------
                                                          904,663          1,148,419            439,261          2,652,781
                                                      -----------        -----------        -----------        -----------

Net (Loss) before cumulative effect of change
   in accounting principle                               (836,373)        (1,087,836)          (385,176)        (2,587,053)
                                                      -----------        -----------        -----------        -----------

Cumulative effect of change in
   accounting principle                                      --                 --                 --             (341,175)
                                                      -----------        -----------        -----------        -----------

Net (Loss)                                            $  (836,373        $(1,087,836)       $  (385,176)       $(2,928,228)
                                                      ===========        ===========        ===========        ===========

Net (Loss) per common share
     Basic and diluted                                $     (0.04)       $     (0.05)       $     (0.02)       $     (0.12)
                                                      ===========        ===========        ===========        ===========

     During the quarter ended August 31, 2003, the Company recorded impairment
     expense of $15,338 on its East Lost Hills prospect and $2,040,424 on other
     undeveloped oil and gas prospects. Also during the quarter ended August 31,
     2003, the Company recorded in its depreciation expense, the depreciation of
     its ARO assets of in the amount of $151,284, and the accretion of the
     undiscounted retirement obligation in the amount of $76,918. In that
     quarter the Company recorded a loss of $341,175 representing the cumulative
     effect of a change in accounting principle, resulting from a change in the
     method of estimating the retirement obligation of its long-lived assets,
     principally its oil and gas properties.

                                      F-22

<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 11 - QUARTERLY FINANCIAL DATA (UNAUDITED) (continued)

                                                                                 Three Months Ended
2002                                                     11/30/01           2/28/02              5/31/02             8/31/02
----                                                     --------           -------              -------             -------

Revenues                                              $    108,914        $     58,564        $     62,087        $     48,649
                                                      ------------        ------------        ------------        ------------

Operating expenses
    Lease operating expenses                                25,167               6,794              28,808              30,615
    Impairment, dry hole and abandonments                  113,544                --                  --            11,609,286
    Depreciation and amortization                            3,496               3,730               3,691               3,688
    General and administrative                             324,143             328,142             323,474             520,570
    Interest                                                  --                  --                 6,562              76,332
                                                      ------------        ------------        ------------        ------------



                                                           466,350             338,666             362,535          12,240,491
                                                      ------------        ------------        ------------        ------------

Net (Loss)                                            $   (357,436)       $   (280,102)       $   (300,448)       $(12,191,842)
                                                      ============        ============        ============        ============

Net (Loss) per common share
     Basic and diluted                                $       (.02)       $       (.01)       $       (.01)       $       (.51)
                                                      ============        ============        ============        ============

In the quarter ended August 31, 2002, the Company recorded an impairment of $11,560,212 on its East Lost Hills project.

                                                                               Three Months Ended
2001                                                     11/30/00            2/28/01             5/31/01            8/31/01
----                                                     --------            -------             -------            -------

Revenues                                              $    111,128        $    309,566        $    965,155       $    238,247
                                                      ------------        ------------        ------------       ------------

Operating expenses
    Lease operating expenses                                  --                 3,052              78,005             20,961
    Impairment                                                --                  --                  --           13,339,911
    Depreciation and amortization                            4,098               4,843               5,507              3,375
    General and administrative                             254,248             320,781             370,021            361,585
                                                      ------------        ------------        ------------       ------------


                                                           258,346             328,676             453,533         13,725,832
                                                      ------------        ------------        ------------       ------------

Net (Loss) Income                                     $   (147,218)       $    (19,110)       $    511,622       $(13,487,585)
                                                      ============        ============        ============       ============

Net (Loss ) income per common share
     Basic and diluted                                $      (.007)       $      (.001)       $       .022       $      (.569)
                                                      ============        ============        ============       ============
</TABLE>

     In the quarter ended August 31, 2001, the Company recorded an impairment of
     $13,339,911 on its oil and gas properties due to a ceiling test limitation.
     Included in the impairment is a reclassification of depletion originally
     recorded on oil and gas properties of $16,035 and $52,421 for the quarters
     ended February 28, 2001 and May 31, 2001, respectively.

                                      F-23