U.S. Securities And Exchange Commission
                             Washington, D.C. 20549

                                 FORM 10-KSB/A1

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

     For the fiscal year ended August 31, 1998

[ ]  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 small business issuer in its charter)


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

 1675 Broadway, Suite 1150, Denver, CO                      80202
 -------------------------------------                      -----
(Address of principal executive offices)                  (Zip Code)

          Issuer'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
      None                                                None
      ----                                                ----

           Securities registered pursuant to Section 12(g) of the Act:
                          $.001 Par Value Common Stock
                          ----------------------------
                                (Title of Class)

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B contained herein, and no disclosure will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form 10- KSB or any
amendment to this Form 10-KSB. [X]

     Issuer's revenues for the fiscal year ended August 31, 1998 were $46,145.

     The  aggregate  market  value of the voting  stock  held by  non-affiliates
computed  based on the last sale price of such stock as of December 2, 1998, was
$16,538,417.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     The number of shares  outstanding of each of the issuer's classes of common
equity as of December 2, 1998 is as follows:

          $.001 Par Value Common Stock              9,421,470



<PAGE>


                                     PART I

ITEMS 1 AND 2. DESCRIPTION OF BUSINESS AND PROPERTIES

Overview

     PYR  Energy  Corporation  (the  "Company")  is an  independent  exploration
company  that  applies  advanced  3-D seismic  and  computer  aided  exploration
("CAEX")  technology to systematically  explore for and exploit onshore domestic
natural gas and oil  accumulations in the western United States.  With a primary
technical focus, the Company has ongoing exploration and exploitation activities
primarily in the San Joaquin basin of California,  and to a lesser degree in the
Denver basin of Colorado and  Nebraska,  the Big Horn basin of Wyoming,  and the
central Montana trough of Montana.

     Since  its  inception  in 1996,  the  Company  has  developed  a number  of
exploration   and   exploitation   projects   possessing   a  critical   mix  of
high-potential,    high-risk   exploration   targets   and   moderate-potential,
moderate-risk  exploitation plays. The Company generates most of its exploration
projects internally,  and therefore has the ability to retain a sizeable working
interest in each project based on associated project risk and financial leverage
through  industry  joint  ventures.  The  Company  attempts  to limit  financial
exposure on a project by project  basis by forming  industry  alliances  through
which the Company's  technical  expertise can be complemented with the financial
resources and operating expertise of established companies. The Company does not
intend to operate the drilling of project wells.

     The Company has successfully  assembled a highly  motivated  geoscience and
management team with extensive technical  experience,  as well as a proven track
record of  resource  exploitation  and  business  development.  The  Company was
founded by Scott  Singdahlsen,  a  geophysicist  who previously was a founder of
Interactive  Earth Sciences  Corporation,  a 3-D seismic  consulting firm in the
Rocky Mountain region, and by Robert Suydam, a geologist employed by a number of
oil and gas  exploration  companies  for an  aggregate  of  over 30  years.  The
Company's  technical/management  team of  goephysicists  and  geologists  brings
together   substantial   experience  in  exploration,   exploitation,   and  the
application of advanced geological and geophysical technology. Historically, the
Company's  technical team has had exposure to more than 100 3-D seismic surveys.
This  experience has resulted in development of expertise in the  application of
seismic technology for exploration and exploitation.

     The Company was  incorporated  in March 1996 in the state of Delaware under
the name Mar  Ventures  Inc.  Prior to  August 6,  1997 the  Company's  business
consisted of the marketing of traditional  television programming from a limited
film  library to  television  and cable  television  operators.  Effective as of
August 6, 1997, the Company purchased all the ownership interests of PYR Energy,
LLC, an oil and gas exploration  company founded in May 1996 by Scott Sindahlsen
and Robert Suydam, and, in a separate  transaction,  it sold its former business
to the prior  president of the Company.  Also on that date,  the Company  issued
units of its common stock and common stock purchase warrants for an aggregate of
$1,500,000.   The  warrants   subsequently   expired  without   exercise.   Upon
consummation  of the  acquisition  of PYR Energy,  LLC, the former  officers and
directors of the Company resigned, and the directors and officers of PYR Energy,
LLC, together with another individual,  became the officers and directors of the
Company.  Effective as of November 12, 1997, the Company changed its name to PYR
Energy Corporation.

                                       1
<PAGE>


Current Status

     During fiscal 1998, the Company and other working interest owners commenced
drilling  on the  Company's  first two test  wells - the  Bellevue  #1-17 on the
Company's East Lost Hills prospect,  which  commenced  drilling in May 1997, and
the Federal  #67X-30,  which  commenced  drilling in July 1997 on the  Company's
School Road  prospect.  The School Road test well was plugged and  abandoned  on
September 18, 1998  although the Company is  evaluating  the results in order to
determine  any potential  future  exploration  possibilities  at its School Road
acreage.

     On November 23, 1998,  the East Lost Hills prospect well suffered a blowout
after having reached a depth of approximately  17,600 feet out of targeted total
depth of 19,000  feet.  Bellevue  Resources,  Inc.,  a  subsidiary  of Elk Point
Resources,  Ltd., is the operator of the well and is currently attempting to get
the well blowout under  control.  If this can be achieved,  then the Company and
the other working  interest owners will evaluate the situation and determine the
manner for proceeding. See " - Southern San Joaquin Basin, California".

     In  October  and  November   1998,  the  Company  issued  $2.5  million  of
Convertible  Promissory  Notes in a  private  placement  to a  limited  group of
investors.  These notes are convertible into the Company's convertible preferred
stock  (subject  to  authorization  of the  preferred  stock by the  Company'  s
stockholders),  which would then be convertible into the Company's common stock.
See "Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Private Placement
of Notes".

     The Company's  offices are located at 1675  Broadway,  Suite 1150,  Denver,
Colorado 80202, telephone number (303) 825-3748.

Disclosure Regarding Forward-Looking Statements And Cautionary Statements

Forward-Looking Statements
--------------------------

     This Annual  Report on Form 10-KSB  includes  "forward-looking"  statements
within the meaning of Section 21E of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange Act"). All statements other than statements of historical
facts included in this Annual Report,  including without  limitation  statements
under  "ITEMS 1 AND 2.  DESCRIPTION  OF BUSINESS  AND  PROPERTIES"  and "ITEM 7.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATION",  regarding the Company's financial position,  business strategy, and
plans and  objectives  of management  of the Company for future  operations  and
capital  expenditures,  are  forward-looking  statements.  Although  the Company
believes that the expectations  reflected in the forward-looking  statements and
the  assumptions  upon  which  the  forward-looking  statements  are  based  are
reasonable, it can give no assurance that such expectations and assumptions will
prove to have been correct.  Additional  statements concerning important factors
that  could  cause  actual  results  to  differ  materially  from the  Company's
expectation  ("Cautionary  Statements")  are disclosed below in the "-Cautionary
Statements"  section and elsewhere in this Annual  Report.  All written and oral
forward-looking  statements attributable to the Company or persons acting on its
behalf  subsequent to the date of this Annual Report are expressly  qualified in
their entirety by the Cautionary Statements.

                                       2
<PAGE>


Cautionary Statements
---------------------

     In addition to the other information  contained in this Annual Report,  the
following  Cautionary  Statements  should  be  considered  when  evaluating  the
forward-looking statements contained in this Annual Report.

Start-Up Nature Of The Company's Oil And Gas Business; Absence Of Profits

     The  Company was formed in 1996,  and does not have a history of  sustained
profit from operations.  The development of the Company's  business will require
substantial  expenditures.  The Company's future  financial  results will depend
primarily  on its  ability to locate  hydrocarbons  economically  in  commercial
quantities,  to provide drilling site and target depth recommendations resulting
in profitable productive wells and on the market prices for oil and natural gas.
There can be no assurance that the Company will achieve or sustain profitability
or positive cash flows from operating activities in the near future.

Oil And Gas Prices; Marketability Of Production

     Even if the Company is able to discover or acquire oil and gas  production,
of which  there is no  assurance,  the  Company's  revenues,  profitability  and
liquidity will be highly  dependent upon  prevailing  prices for oil and natural
gas. Oil and gas prices can be extremely  volatile and in recent years have been
depressed  by excess  total  domestic  and  imported  supplies.  There can be no
assurance  that current price levels can be sustained.  Prices also are affected
by  actions  of  state  and  local  agencies,  the  United  States  and  foreign
governments,  and international cartels. These external factors and the volatile
nature of the energy markets make it difficult to estimate  future prices of oil
and natural gas. Any substantial or extended  decline in the price of oil and/or
natural  gas would have a material  adverse  effect on the  Company's  financial
condition and results of operations,  including  reduced cash flow and borrowing
capacity.  All of these factors are beyond the control of the Company.  Sales of
oil and natural gas are seasonal in nature,  leading to substantial  differences
in cash flow at various times  throughout  the year.  The  marketability  of the
Company' s gas  production,  if any, will depend in part upon the  availability,
proximity  and  capacity of gas  gathering  systems,  pipelines  and  processing
facilities.  Federal  and  state  regulation  of  oil  and  gas  production  and
transportation,  general economic  conditions,  changes in supply and changes in
demand all could  adversely  affect the Company's  ability to produce and market
oil and  natural  gas.  If  market  factors  were to  change  dramatically,  the
financial  impact on the  Company  could be  substantial.  The  availability  of
markets  and the  volatility  of product  prices  are beyond the  control of the
Company and thus represent a significant risk.

Reliance On Industry Participants

     The Company  attempts to limit  financial  exposure on a project by project
basis by forming industry alliances where the Company's  technical expertise can
be  complemented  with  the  financial  resources  and  operating  expertise  of
established  companies.  If the  Company  were not able to form  these  industry
alliances,  this  could  limit the  Company's  ability  to fully  implement  its
business  plan  and  could  have a  material  adverse  effect  on the  Company's
business, financial condition and results of operations.

Non-Operator Status

     The Company  focuses  primarily on  providing  3-D imaging and analysis and
relies upon other  project  partners to provide and complete  all other  project
operations and  responsibilities  including operating,  drilling,  marketing and

                                       3
<PAGE>


project  administration.  As a result, the Company has only a limited ability to
exercise  control over a  significant  number of a project's  operations  or the
associated costs of such operations.  The success of a project is dependent upon
a number of factors  which are outside of the  Company's  area of expertise  and
project  responsibilities.   Such  factors  include:  (i)  the  availability  of
favorable  term  leases  and  required   permitting   for  projects,   (ii)  the
availability  of  future  capital   resources  by  the  Company  and  the  other
participants  to the  purchasing of leases and the drilling of wells,  (iii) the
approval of other  participants  to the purchasing of leases and the drilling of
wells on the projects and (iv) the economic  conditions at the time of drilling,
including the prevailing and  anticipated  prices for oil and gas. The Company's
reliance on other project  partners and its limited ability to directly  control
certain project costs could have a material adverse effect on the realization of
expected rates of return on the Company's investment in certain projects.

Ability To Discover Reserves

     The Company's  future success is dependent upon its ability to economically
locate oil and gas reserves in commercial quantities.  Except to the extent that
the  Company  acquires   properties   containing  proved  reserves  or  conducts
successful exploration and development activities,  or both, the proved reserves
of the Company,  if any,  will decline as reserves are  produced.  The Company's
ability  to  do so  is  dependent  upon  a  number  of  factors,  including  its
participation in multiple exploration projects and its technological  capability
to locate oil and gas in  commercial  quantities.  Because  the Company may rely
upon other industry  participants to develop the Company's exploration projects,
no  assurances  can be given  that the  Company  will  have the  opportunity  to
participate  in projects which  economically  produce  commercial  quantities of
hydrocarbons in amounts necessary to meet its business plan or that the projects
in which it elects to participate will be successful.  There can be no assurance
that the Company's planned projects will result in significant  reserves or that
the Company will have future success in drilling productive wells at low reserve
replacement  costs.  The  Company  has  not  yet  established  any  oil  and gas
production, nor has it booked any proved reserves.

Substantial Capital Requirements And Liquidity

     In order to continue its oil and gas exploration  plans fully,  the Company
anticipates that it will need additional  funding. In October and November 1998,
the  Company  closed a private  placement  resulting  in a capital  infusion  of
$2,500,000.    See    "Item    12.    CERTAIN    RELATIONSHIPS    AND    RELATED
TRANSACTIONS--Private  Placement Of Notes".  After paying  existing  outstanding
commitments,  the Company  anticipates  having  approximately  $1,000,000 of the
funds to cover future business expenditures.  The Company does not have a steady
source  of  revenue  to  provide  funding  to  sustain  operations.  There is no
assurance  that the Company will be able to obtain a reliable  source of revenue
to sustain its operations.

Risk Of Exploratory Drilling Activities

     Exploration for oil and natural gas is a speculative  business  involving a
high degree of risk, including the risk that no commercially  productive oil and
gas  reservoirs  will be  encountered.  The  cost of  drilling,  completing  and
operating  wells is often  uncertain and drilling  operations  may be curtailed,
delayed or  canceled  as a result of a variety of factors  including  unexpected
formation  and  drilling   conditions,   pressure  or  other  irregularities  in
formations,  equipment  failures or  accidents,  as well as weather  conditions,
compliance with governmental requirement and shortages or delays in the delivery
of equipment. There is no assurance that the expenditures made by the Company on
its oil and natural gas properties  will result in discoveries of oil or natural
gas in  commercial  quantities.  Some  test  wells,  as a  consequence,  may not
ultimately be developed into producing wells and may be abandoned.

                                       4
<PAGE>


Competition

     The  Company  competes in the areas of oil and gas  exploration  with other
companies,  many of which  may have  substantially  larger  financial  and other
resources.  From time to time,  there may be  competition  for, and shortage of,
exploration, drilling and production equipment and these shortages could lead to
an  increase  in costs and to delays in  operations  that  could have a material
adverse effect on the Company.  The Company may therefore not be able to acquire
desirable  properties or equipment required to develop its properties.  Problems
of this nature also could prevent the Company from producing any oil and natural
gas it discovers at the rate it desires to do so.

General Risks Of Oil And Gas Operations

     The  nature  of the oil and gas  business  involves  a  variety  of  risks,
including the risks of operating hazards such as fires,  explosions,  cratering,
blowouts,  such as the blowout at the exploratory  well in which the Company has
an  interest in East Lost  Hills,  and  encountering  formations  with  abnormal
pressures, the occurrence of any of which could result in losses to the Company.
The Company will maintain insurance against some, but not all, of these risks in
amounts that  management  believes 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 the Company's  financial
position. See "--Significant Properties--Southern San Joaquin Basin, California"
concerning the blowout at the East Lost Hills exploratory well.

Technology Changes

     The oil  and  gas  industry  is  characterized  by  rapid  and  significant
technological  advancements  and  introductions  of new  products  and  services
utilizing new  technologies.  As new  technologies  develop,  the Company may be
placed at a competitive  disadvantage,  and competitive  pressures may force the
Company to implement such new  technologies  at  substantial  cost. In addition,
other oil and gas finding  companies may implement new  technologies  before the
Company,  and  consequently  such  companies  may be  able to  provide  enhanced
capabilities  and superior  quality compared with that which the Company is able
to provide.  There can be no assurance  that the Company will be able to respond
to such competitive  pressures and implement such technologies on a timely basis
or at an acceptable cost. One or more of the technologies  currently utilized by
the Company or implemented in the future may become obsolete.  In such case, the
Company's  business,  financial  condition  and results of  operations  could be
materially  adversely  affected.  If the  Company is unable to utilize  the most
advanced commercially  available technology,  the Company's business,  financial
condition and results of operations could be materially and adversely affected.

Government Regulations And Environmental Risks

     The production and sale of oil and gas are subject to a variety of federal,
state and local  government  regulations  including  regulation  concerning  the
prevention  of waste,  the  discharge of  materials  into the  environment,  the
conservation of oil and natural gas, pollution, permits for drilling operations,
drilling  bonds,  reports  concerning  operations,  the  spacing  of wells,  the
unitization  and pooling of  properties,  and various  other  matters  including
taxes.  Many  jurisdictions  have at various  times imposed  limitations  on the

                                       5
<PAGE>


production of oil and gas by restricting  the rate of flow for oil and gas wells
below their actual capacity to produce. During the past few years there has been
a  significant   amount  of  discussion  by  legislators  and  the  presidential
administration  concerning  a variety of energy tax  proposals.  There can be no
certainty that any such measure will be passed or what its effect will be on oil
and natural  gas prices if it is passed.  In  addition,  many states have raised
state taxes on energy sources and additional increases may occur, although there
can be no  certainty  of the effect that  increases  in state energy taxes would
have on oil and  natural  gas  prices.  Although  the  Company  intends to be in
substantial  compliance with applicable  environmental and other government laws
and regulations, there can be no assurance that significant costs for compliance
will not be  incurred in the  future.  The recent  blowout of the well East Lost
Hills  exploratory  well in which the Company has an interest raises a number of
these risks.  Although the Company currently  believes that costs related to the
blowout and the release of potential  pollutants into the atmosphere are covered
by insurance,  there is no assurance that this is the case. Until the blowout is
brought  under  control and the Company and the  operator of the well can assess
the situation and potential costs,  the Company cannot quantify  potential costs
to the  Company.  See  "--Significant  Properties--Southern  San Joaquin  Basin,
California".


Variability Of Operating Results

     The Company's  operating results,  as a start up company in the oil and gas
industry,  may vary significantly  during any financial period. These variations
may be caused by  significant  periods  of time  between  each of the  Company's
discoveries  and  developments,  if any,  of oil or natural  gas  properties  in
commercial  quantities.  These  variations  may also be caused by the volatility
associated with oil and gas prices.  See "Oil And Gas Prices;  Marketability  Of
Production".

Risks Associated With Management Of Growth

     Because of its small size, the Company desires to grow extremely 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 the  Company's  financial,  technical,  operational  and
administrative resources. As the Company increases its services and enlarges the
number of projects it is evaluating or in which it is participating,  there will
be additional demands on the Company's  financial,  technical and administrative
resources.   The  failure  to  continue  to  upgrade  the  Company's  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 the
Company's business, financial condition and results of operations.

Dependence On Key Personnel

     The  Company  will  be  highly  dependent  on  the  services  of  D.  Scott
Singdahlsen and its other geological and geophysical staff members.  The loss of
the services of any of them could have a material adverse effect on the Company.
The Company does not have an  employment  contract with Mr.  Singdahlsen  or any
other employee.

Concentration Of Risks; Lack Of Diverse Business Operations

                                       6
<PAGE>


     The  Company  is  currently  pursuing  only  the oil  and  gas  exploration
business.  Although the Company is involved in other oil and gas projects, it is
concentrating  the  majority of its initial oil and gas  exploration  efforts on
approximately  60,000 gross and 31,000 net exploratory  acres in the San Joaquin
basin.  Although the Company is involved in three separate and distinct projects
in the San Joaquin basin, the Company's  exploration efforts are concentrated in
this same general area and this lack of diverse business operations subjects the
Company to a certain degree of concentration of risks. The future success of the
Company may be dependent upon its success in discovering  and developing oil and
gas in commercial  quantities on its San Joaquin properties and upon the general
economic success of the oil and gas industry.

Certain Definitions

     Unless otherwise  indicated in this Annual Report,  natural gas volumes are
stated at the legal pressure base of the state or area in which the reserves are
located at 60(degree)Fahrenheit.  Oil equivalents are determined using the ratio
of 6 Mcf of natural  gas to one barrel of crude oil,  condensate  or natural gas
liquids  so that 6 Mcf of  natural  gas are  referred  to as one  barrel  of oil
equivalent or "BOE".

     As used in this  Annual  Report,  the  following  terms have the  following
specific  meanings:  "Mcf" means thousand cubic feet,  "Bcf" means billion cubic
feet, "Bbl" means barrel,  "MBbl" means thousand barrels,  "MMBoe" means million
barrels of oil equivalent,  "MMBbl" means million barrels,  "MMBO" means million
barrels of oil,  "BBO" means  billion  barrels of oil and "Tcf"  means  trillion
cubic feet.

     With respect to information  concerning the Company's  working interests in
wells or drilling  locations,  "gross" gas and oil wells or "gross" acres is the
number of wells or acres in which the Company has an interest, and "net" gas and
oil wells or "net" acres are determined by multiplying "gross" wells or acres by
the Company's working interest in those wells or acres. A "working  interest" in
an oil and gas  lease is an  interest  that  gives the owner the right to drill,
produce, and conduct operating activities on the property and to receive a share
of production of any hydrocarbons covered by the lease. A working interest in an
oil and gas lease also  entitles  its owner to a  proportionate  interest in any
well  located  on the lands  covered by the  lease,  subject  to all  royalties,
overriding   royalties  and  other  burdens,   to  all  costs  and  expenses  of
exploration,  development and operation of any well located on the lease, and to
all risks in connection therewith.

     A  "development  well" is a well drilled as an additional  well to the same
horizon or horizons as other producing wells on a prospect, or a well drilled on
a spacing  unit  adjacent  to a spacing  unit with an existing  well  capable of
commercial  production  and which is intended  to extend the proven  limits of a
prospect.  The latter type of  development  well  drilling is known as "step-out
drilling".  An  "exploratory  well"  is a  well  drilled  to  find  commercially
productive  hydrocarbons in an unproved area, or to extend significantly a known
prospect.

     "Reserves"  means  natural  gas and crude oil,  condensate  and natural gas
liquids on a net revenue interest basis,  found to be commercially  recoverable.
"Proved developed  reserves"  includes proved developed  producing  reserves and
proved developed  behind-pipe  reserves.  "Proved developed  producing reserves"
includes only those reserves  expected to be recovered from existing  completion
intervals  in casing of  existing  wells when the cost of making  such  reserves
available for production is relatively small compared to the cost of a new well.
"Proved  undeveloped  reserves" includes those reserves expected to be recovered
from new  wells on proved  undrilled  acreage  or from  existing  wells  where a
relatively major expenditure is required for recompletion.

                                       7
<PAGE>


     "Infill  drilling" means drilling of an additional well or additional wells
in order to more adequately drain a reservoir.

     "Stratigraphic  trap"  means  a  barrier  that  impedes  the  migration  of
hydrocarbons  caused by either a nonporous formation sealing off the top edge of
a reservoir bed or by a change of porosity and permeability within the reservoir
bed  itself.   "Strategraphic   play"  means  a  prospect  targeted  to  test  a
strategraphic trap.

     "API" means a measure of gravity  based on  standards  set by the  American
Petroleum Institute.

     "Cretaceous D-Sand and J-Sand  reservoirs" means sandstone  reservoirs that
contain  hydrocarbons  of  Cretaceous  age that are found in the Denver basin of
Colorado, Wyoming and Nebraska.

     "Cretaceous incised valley-filled reservoirs" means sandstone reservoirs of
Cretaceous  age that were  deposited in valleys  carved into  underlying  strata
during a period of falling sea level.

     "Cretaceous  reservoirs"  means rock reservoirs most commonly  comprised of
sandstone  that were  deposited  during the  Cretaceous  Period.  The Cretaceous
Period occurred between 66 and 144 million years before present.

     "Down-spaced  drilling" means a method of development drilling whereby well
density in a given area is increased by drilling between existing wells.

     "Palynology  analysis"  means  an  analysis  of  a  rock  sequence  through
examination of contained spores and/or pollen. A method of age dating strata.

     "Reserve  capture" means the  quantification  of hydrocarbon  reserves as a
result of drilling and testing a reservoir.

     "Steam  floods"  means a  secondary  recovery  technique  whereby  steam is
injected  into a  hydrocarbon  reservoir in an effort to mobilize  heavy (tarry)
oil.

     "Subthrust  structure"  means a fold of  strata  which is found  beneath  a
thrust fault.

     "Swept  reservoir  pods"  means  distinct  sandstone  units  that have been
depleted of hydrocarbons through the secondary recovery method of waterflooding.

     "Thrusted  anticlinal  feature"  means a fold of  geologic  strata  that is
bounded  by a trust  fault,  which  is a fault  that  results  in  older  strata
overlying younger strata.

     "Turbidite" means a stratigraphic sequence deposited by turbidity currents,
commonly associated with submarine canyons.


                                       8
<PAGE>


Strategy

     The Company's business strategy is to continue to enhance shareholder value
by leveraging its technical experience and expertise with 3-D seismic technology
to identify  exploration and exploitation  projects with  significant  potential
reserves and economic results based on the application of appropriate technology
and suitable project risk management.  The Company's ongoing goal is to increase
its reserve base through a focus on mature  hydrocarbon basins where it believes
that the historical  under-utilization  of seismic technology creates tremendous
opportunities. It is the Company's view point that the systematic application of
advanced  seismic imaging and  visualization  to exploration  can  significantly
reduce drilling risk and enhance financial results. The Company's strategy is to
focus on applying 3-D seismic  technology to explore  properties that lie within
these mature basins and that offer oil and gas reserves that would be materially
significant to the Company.

     The Company has a three-pronged  corporate  approach for the application of
exploration  technology  in these mature  basins.  The three  components of this
strategy are set forth below:

     * Internal  generation  of  exploration  and  exploitation  prospects  with
     special emphasis on 3-D seismic application to stratigraphic play concepts.

     * Identification  and  exploitation of  non-performing  and  under-utilized
     existing 3-D seismic surveys and acreage positions in which the application
     of  technical  expertise  and  advanced  interpretation  and  visualization
     methodologies could significantly impact drilling results.

     * Development of alliances with  exploration and production  companies that
     lack advanced technical resources and expertise.

Exploration and Operating Approach

     The Company  focuses  its  technical  resources  on  obtaining  the highest
quality  subsurface image through advanced  geological and geophysical  methods,
which it believes are more likely to result in the cost effective identification
of oil  and gas  reserves  that  are  materially  significant.  The  Company  is
committed to providing its technical  team with access to the required tools and
support  necessary  to retain a  competitive  advantage  in today's  exploration
environment.  The  Company  strives to provide its  geoscientists  with the most
advanced  imaging and  analytical  technology  available  and provides  employee
incentives to utilize for the  recruitment  and  motivation  of these  technical
experts.

     The  Company  adheres  to  a  disciplined  approach  to  selective  project
participation.  The Company participates only in those projects that it believes
are likely to maximize the return on its capital  investment,  have  significant
reserve growth  potential,  and benefit from the application of advanced seismic
technology.  The Company believes that these factors result in a positive impact
to  the  finding-cost  and  production  economics.   The  Company  actively  and
continually manages its portfolio of exploration and exploitation  projects. The
aggressive  portfolio  management enables the Company to maximize the investment
of  available  capital in a limited  number of high  impact  geologic  plays and
projects.

     The Company  generates many of its  exploration and  exploitation  projects
internally,  and therefore is not dependent on outside parties for project flow.
The Company strives to control all the pre-drill  exploration phases,  including
the  acreage  position  and the  application  of  seismic  technology.  With the
resulting  project  control,  the Company is in the position to fully manage the
exploration  process  and  determine  subject to its  financial  resources,  the
appropriate  level of working  interest  that it retains in the  drilling of any

                                       9
<PAGE>


associated  wells.  The Company  aggressively  leverages its project control and
technical  expertise to potential industry partners thereby maximizing return on
investment while controlling  capital  exposure.  The Company does not intend to
operate the drilling of project wells,  but intends to retain the flexibility to
maintain a sufficient  working  interest in projects to enhance  leverage of its
technical resources and influence operator actions.

Significant Projects

     The Company's exploration  activities are primarily focused on the southern
San Joaquin  basin of  California.  The Company also has projects  identified in
selective Rocky Mountain basins.  Advanced seismic imaging of the structural and
stratigraphic  complexities,  common to these regions, provides the Company with
enhanced  ability to identify  significant  hydrocarbon  potential.  A number of
these  projects,  especially in the San Joaquin basin,  offer multiple  drilling
opportunities   with  individual  wells  having  the  potential   capability  of
encountering multiple reservoirs.

     The following  provides a summary and status of the  Company's  exploration
areas and significant  projects.  While actively pursuing  specific  exploration
activities in each of the following areas, the Company is continually  reviewing
additional  opportunities  in these  core  areas  and in other  areas  that meet
certain  exploration  and  exploitation  criteria.  There is no  assurance  that
drilling  opportunities  will continue to be  identified in the current  project
portfolio or will be successful if drilled.

Southern San Joaquin Basin, California

     The San  Joaquin  basin  of  California  has  proven  to be one of the most
productive  hydrocarbon  producing basins in the continental  United States.  To
date, the approximately  14,000 square mile basin has produced in excess of 12.7
billion barrels of oil equivalent,  and contains 25 fields  classified as giant,
with cumulative production of more than 100 MMBoe.

     The San Joaquin  contains  six of the 25 largest oil fields in the U.S. All
six of these fields were  discovered  between 1890 and 1911, a full decade prior
to the discovery of the first giant Texas oil field.  The basin  accounts for 34
percent of California's  actively  producing  fields,  yet produces more than 75
percent 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.
San  Joaquin  basin  production  totals  for  1997  reported  by the  California
Department  of Oil and Gas for all  producers in the  aggregate  indicate  total
production  of 246.9  MMBoe.  Of this figure,  Kern County  accounts for over 90
percent of the oil production from the San Joaquin Basin.

     Exploration Opportunity. For the 100 plus years of its productive life, the
San  Joaquin  Basin  has been  dominated  by major oil  companies  and large fee
acreage holdings. As a result of these conditions,  the basin has generally been
under-explored by independent exploration and production companies,  groups that
usually bring advanced  technologies  to their  exploration  efforts.  The large
fields in the basin were all discovered on surface anticlines and produce mostly
heavy oil from depths of less than 5,000 feet. As a consequence, basin operators
have employed only those advanced  engineering  technologies related to enhanced
production  practices  including  steam  floods  and most  recently,  horizontal
drilling.

     The  basin  as a whole  has  suffered  from a lack of  applied  exploration
technology and deep drilling. Approximately one percent of the total basin wells
have been drilled to a depth  greater  than 12,000 feet,  with none of the 2,000

                                       10
<PAGE>


wells drilled during 1996 being to a depth greater than 12,000 feet.  Additional
1996 statistics indicate that the average well depth drilled during the year was
just slightly more than 1,800 feet.  Three-dimensional seismic has been employed
only in limited quantity and in certain areas of the basin.

     Tenneco  and ARCO  shot a  limited  number  of 3-D  surveys  in the mid- to
late-1980s on the  Bakersfield  Arch and to the south in the Yowlumne area. With
the ongoing  retrenchment  of majors in the basin,  independents  such as Torch,
Nuevo Energy,  Vintage  Petroleum,  HarCor Energy and Enron Oil & Gas have moved
into prominent  positions within the basin and are bringing  applied  geoscience
technologies  with them.  More 3-D  surveys  have been  acquired in the last two
years  than in all the  previous  years  combined.  This  trend is  expected  to
accelerate in the upcoming years as a renewed  emphasis is placed on 3-D seismic
exploitation and exploration.

     With limited  exploration in the San Joaquin basin since the "boom" days of
the early 1980s,  the Company believes that multiple  exploration  opportunities
are available.  Deep basin targets, both structural and stratigraphic in nature,
remain  largely  untested with modern  seismic  technology and the drill bit. In
addition,  retrenchment  of the majors in the basin has  caused  many of them to
rethink their  policies  regarding  their large fee acreage  positions.  For the
first time in history,  many of these companies are opening up these fee acreage
positions  to outside  exploration  by  aggressive  independent  companies.  The
Company has identified and negotiated  exclusive access to three  high-potential
exploration plays in the southern San Joaquin basin.

     East Lost Hills.  The Company has identified  and has undertaken  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 MMBoe from  shallow pay
zones in a large thrusted anticlinal feature.

     This unconventional deep prospect has significant  structural and reservoir
risk,  but the potential for large  reserves  makes it an attractive  play. In a
joint  effort with Denver  based  Armstrong  Resources  LLC  ("Armstrong"),  the
Company has  analyzed  and  interpreted  over 350 miles of  high-resolution  2-D
seismic data to help refine the  structural  mapping of the  prospect.  Advanced
pre-stack depth migration and  interpretation  clearly defines a deep sub-thrust
structure.  Two wells  drilled to the east of the  prospect,  in the  mid-1970s,
proved the productivity  potential of free oil (42 degree API) and gas at depths
below 17,000 feet. Ongoing source rock and maturation modeling suggests that the
oil generation  window exists at depths between 15,000 and 17,000 feet, and that
early migration of hydrocarbons  should preserve  reservoir quality at East Lost
Hills.

     In early 1998,  the  Company  and  Armstrong  entered  into an  exploration
agreement with a number of established  Canadian  partners to participate in the
drilling of an initial exploratory well to fully evaluate the feature.  Bellevue
Resources,  Inc., a subsidiary of Elk Point Resources,  Ltd., is operator of the
well.  Currently,   other  participants  in  the  well  are:  Berkley  Petroleum
Corporation,  Ceniarth  Inc.,  Paramount  Resources,  Ltd.,  Richland  Petroleum
Corporation,   Westminister   Resources,   Ltd,  STB  Energy,  Inc.,  Kookaburra
Resources, and Hilton Petroleum Company. PYR received cash consideration for its
share of acreage in this play and a carried 6.475% working  interest through the
tanks.  PYR owns an additional  4.1% working  interest for a total before payout
working interest of 10.575%, which reduces to 9.253% after payout.

                                       11
<PAGE>


     The Bellvue  Resources et al #1-17 East Lost Hills well,  located in SE1/4.
Sec 17, T26S, R21E, Kern County, California, commenced drilling on May 15, 1998.
The well is designed to test  prospective  Miocene  sandstone  reservoirs in the
Temblor Formation. During September 1998, the well was sidetracked in an attempt
to gain  better  structural  position  and  delineate  potential  uphole pay. On
November 23, 1998,  the well was drilling at 17,600 feet toward a total depth of
19,000 feet when it blew out and ignited. No personal injuries resulted,  and an
expert well  control  team was engaged to contain the fire.  If the operator and
the well control team are able to bring the well under control,  a determination
will then be made concerning the manner in which to proceed. The Company and its
joint  working  interest  owners  control  approximately  23,000  gross acres of
leasehold over the prospect.

     At the time that the #1-17 East Lost Hill well was sidetracked,  one of the
participants  (the  "Declining  Participant")  claimed  that it had the right to
decline to  participate  in the  sidetracking  operations and still maintain its
interest in the well, subject to a "non-consent"  penalty.  The operator and the
other  participants  dispute the right of the Declining  Participant to maintain
its  interest in the well on this basis,  and  proceeded  with the  sidetracking
operation  while  denying the  Declining  Participant's  right to  maintain  its
interest.  Although the Company believes its position on this matter is correct,
if it loses this dispute,  the  after-payout  working interest of the Company in
the well and in the other acreage subject to the related  exploration  agreement
could be reduced to approximately 9.085%.

     School Road/Southeast  Maricopa. The Company has signed a lease and seismic
option with Chevron  Production,  USA covering  exclusive  exploration rights on
approximately 22,000 acres of fee land in the Maricopa sub-basin at the southern
end of the San Joaquin  valley.  The  Maricopa  sub-basin  represents  a rapidly
subsiding  fore-arc  basin  containing  more than 30,000  feet of  post-Jurassic
sediments.  The  Maricopa  area is the  location  of the major  depo-center  for
deep-water turbidite deposition in the San Joaquin. The majority of oil produced
in the Maricopa sub-basin and on the Bakersfield arch to the north has come from
the Upper Miocene Stevens and older (Eocene) turbidite sands.

     During 1998, the Company  completed  acquisition of approximately 52 square
miles of 3-D  seismic  data over its  Southeast  Maricopa  exploration  project.
Western  Geophysical  Company acted as the Company's seismic  contractor for the
data acquisition. The processed data was delivered to the Company on October 29,
1998 and the Company is  currently  in the process of  interpreting  the data in
order to identify drillable prospects. It is anticipated that the interpretation
will take as long as three  months to complete  before  taking  this  project to
potential  industry partners for  participation.  The Company intends to sell an
appropriate  portion of its  interest in this project in order to receive a cash
consideration  and/or  a  carried  interest  in the  drilling  of  one  or  more
exploration wells. The Company intends to drill at least one exploration well on
this  prospect   during  the  second  quarter  of  calendar  1999.  No  drilling
commitments have been made or received.

     Basin wide, the Stevens sands have produced in excess of 1,350 MMBbl,  with
mean  field  size  being in excess  of 70  MMBbl.  Stevens  sand  production  is
primarily from stratigraphic  traps, and ranges in depth from 7,500 feet to over
14,000 feet.  Reservoir  quality is good with porosites ranging up to the mid 20
percent range. Oil gravities range from 28 to 55 degree API with the lighter oil
occurring in deeper production to the south. With the superior reservoir quality
and light hydrocarbons,  the Stevens' reservoirs make an attractive  exploration
target with significant potential reserves.

                                       12
<PAGE>


     Directly surrounding the Chevron acreage position, five fields produce from
Stevens  equivalent sands.  These fields include Landslide (14.9 MMBoe),  Paloma
(132.9 MMBoe),  Rio Viejo (7.9 MMBoe), San Emido Nose (21.1 MMBoe), and Yowlumne
(117.2 MMBoe). These fields all show stratigraphic trapping mechanisms including
updip sand pinch-outs,  lateral facies variation,  and differential  compaction.
These five fields produced over 1.77 MMBbls of light oil and associated  natural
gas in 1997 (1997 Production Statistics,  California Department of Oil and Gas),
and have cumulative aggregate historical  production in excess of 300 MMBoe. Per
well cumulative  production  ranges from a low of 690 MBbl to 2.1 MMBbl,  with a
mean value of 1.3 MMBbl.

     The objective of the School Road/Southeast  Maricopa exploration program is
to apply advanced 3-D seismic  technology and advanced  interpretation  methods,
within a detailed sequence  stratigraphic  framework,  to identify stratigraphic
relationships and potential traps.  Exploration for Stevens  stratigraphic traps
with 2-D seismic data has proven to be largely  unsuccessful  due to the lack of
sufficient  line density to resolve the  stratigraphic  complexity  necessary to
delineate  trapping  mechanisms.  The discovery of the  Landslide  field in 1985
resulted from the application of 3-D seismic  exploration.  By today's standard,
that data suffered from low fold,  low  frequency,  short offset,  and generally
poor  imaging  of  detailed  stratigraphic  relationships.   Advances  in  field
acquisition,  data  processing,  and  visualization  methods since the mid-1980s
should  allow much more  detailed  seismic  analysis  of  complex  stratigraphic
geometries and trapping mechanisms.

     The School  Road/Southeast  Maricopa  exploration  agreement  with  Chevron
involves a drill-to-earn option on more than 22,000 fee acres, a seismic license
to an existing (1992) 42-square-mile 3-D seismic survey (School Road), more than
200 miles of  proprietary  2-D seismic  data, a  proprietary  regional  sequence
stratigraphic  framework based on extensive,  detailed palynology analysis,  and
all available well file data.  This unique  database is anticipated to allow the
complete  integration  of  geology  and  modern  3-D  seismic  data to  identify
potential trapping opportunities within the stratigraphically  complex turbidite
systems present in the sub-basin. The drill-to-earn option entitles the Company,
for each well it drills, to earn a 100 percent working interest and a 75 percent
net revenue interest in 1,280 acres in the vicinity of the well drilled.

     On June 1, 1998,  the  Company  executed  a  participation  agreement  with
Houston based Seneca Resources for the Company's School Road acreage.  The drill
to  earn   agreement   provided   PYR  with  a   prospect   fee  and  a  carried
through-the-tanks  working  interest in an initial  exploration  well. PYR would
ultimately  retain a 40% working  interest in the School Road acreage.  Drilling
operations  on the Federal  #67X-30  located in SE1/4,  SEC 30, T32S,  R25E were
commenced on July 28, 1998. The well was drilled to a total depth of 12,508 feet
and although  hydrocarbons were encountered,  detailed log analsysis of the well
indicated  that the reservoir  was tight and incapable of sustaining  commercial
production.  The well was plugged and  abandoned on September  18, 1998.  PYR is
currently  evaluating  the  results of the well and  incorporating  the new well
control  into the  seismic  model in order to  determine  any  potential  future
exploration opportunities at its School Road acreage.

     San Emidio.  In November 1998, the Company  exchanged 266,666 shares of its
common  stock for 39 square  miles of 3-D  seismic  data and oil and gas  leases
covering  approximately 5,400 acres adjacent to the Company's Southeast Maricopa
exploration  project.  The Company intends to incorporate  this 3-D seismic data
with the newly  acquired  data at its  Southeast  Maricopa  acreage  in order to
further understand the complex stratigraphic geometries and trapping mechanisms.
After  interpretation  and  evaluation,  there have been two  prospective  areas
identified within the acreage position.  The Company may present this project to

                                       13
<PAGE>


potential  industry partners in conjunction with its Southeast  Maricopa project
or may create an independent  project for presentation.  The Company's  approach
will be to obtain industry  partner  participation in order to receive a carried
interest in the drilling of one or more  exploration  wells. The Company expects
to drill an  exploration  well here in the first or second  quarter of  calendar
year 1999. No drilling commitments have been made or received.

Denver Basin, Colorado and Nebraska

     The Denver  Basin  covers  approximately  60,000  square  miles in parts of
Colorado,  Nebraska  and  Wyoming.  The basin was the second  area in the United
States to produce oil from drilled wells, and has produced more than one billion
barrels of oil equivalent to date.  Published  statistical studies indicate that
an additional 150 MMBoe to 200 MMBoe of reserves remain to be discovered in this
mature basin from Cretaceous reservoirs in stratigraphic traps.

     During  the  past 10  years,  the  Denver  basin  has  been one of the most
actively  drilled  areas in the U.S. due to low  drilling  costs and low reserve
base risk.  Most of the  activity  has  centered  on  down-spaced  drilling  for
Codell/Niobrara  and  Sussex/Shannon/  Parkman targets in the Wattenburg area, a
basin-center gas accumulation.

     As continued  drilling activity has resulted in decreasing  availability of
additional well locations, major Wattenburg operators (HS Resources,  Patina Oil
& Gas, Prima,  NARCO) are  experiencing  significant  retreat,  retrenchment and
consolidation of their operations.  Decreased  activity drilling for shallow gas
offers the Company an  opportunity  to acquire  land and/or  seismic  options to
explore  and  exploit  the  deeper oil prone 'D' and 'J'  sandstone  reservoirs.
Production from these Cretaceous reservoirs results from stratigraphic  trapping
in an incised  valley-fill  depositional  system.  Cretaceous  D-Sand and J-Sand
reservoirs  have been the  traditional  exploration  targets  within  the Denver
basin.  These  reservoirs  account for the majority of production to date in the
basin,  with  cumulative  production  from the D-Sand  totaling  386.6 MMBoe and
J-Sand production totaling 743.4 MMBoe. Modern sequence stratigraphic models and
strong  structural   control  on  deposition   indicate  that  these  traps  are
predictable both in geometry and orientation.

     While seismic data has been employed in the basin since the mid-1950s,  the
success of 2-D seismic  exploration has been limited by  stratigraphic  trapping
and the complex  nature of the reservoir  systems.  The emergence of 3-D seismic
technology  has created  exciting new  exploration  opportunities  in the basin.
While the handful of 3-D surveys acquired to date in the basin have proven to be
economic  successes,  the  downturn  in  basin-wide  activity  has  resulted  in
significant  underutilization  of  this  exploration  application.  The  Company
proposes  to  capitalize  on 3-D  seismic  exploration  opportunities  generated
internally,   and  through  opportunities  arising  from  the  recent,   ongoing
consolidation and retrenchment of major basin operators.

     Exploration Opportunity.  Historically, exploration in the Denver basin has
been  dominated  by  small,   low-cost   operators   employing   subsurface  and
"trend-ology" geological mapping methods. The lack of applied technology and the
stratigraphic  reservoir  complexity  in the basin has  resulted in low drilling
success  rates and overall poor  economic  results.  Expanded use of 3-D seismic
technology  to image  D-Sand and J-Sand  reservoir  should  enhance the economic
results and expedite the discovery  process.  To date,  less than 20 3-D seismic
surveys have been acquired  within the Denver basin.  Geoscientists  employed by
the  Company  have been  directly  involved  in eight of these  projects.  These
projects  have proven the economic  viability of 3-D seismic in  unraveling  the
stratigraphic  complexity and  productivity  of Cretaceous  incised  valley-fill
reservoirs and have resulted in the identification and production of significant
incremental reserves.

                                       14
<PAGE>


     Geological  and  geophysical  methodologies  developed  internally  by  the
Company allow for the identification and differentiation of significant economic
reserves from the background of marginal  producers  common in the Denver basin.
The application of these methodologies  result in the potential for discovery of
significant  reserves with high success rates and low finding costs. The Company
proposes to undertake a systematic exploration/exploitation effort in the Denver
basin. A regional  stratigraphic  framework for  Cretaceous  reservoirs has been
constructed  leading to the  identification  of numerous D-Sand and J-Sand leads
and  prospects.  Detailed  geologic  work is underway to refine  these leads and
prospects with regard to  prospectivity,  reserve potential and applicability of
3-D seismic  imaging.  The centerpiece of the proposed  exploration/exploitation
effort  will  be the  application  of  3-D  seismic  to  delineate  and  resolve
stratigraphic  traps.  Previous  experience  with 3-D seismic  technology in the
Denver  basin  has  provided  a  competitive  advantage  in risk  reduction  and
identification  of  prospective   drilling   locations.   The  Company  has  one
exploitation project underway in the basin, and is continuing efforts to develop
and define additional opportunities.

Big Horn Basin, Wyoming and Montana

     The Big Horn basin of Wyoming  and Montana is an  asymmetric  intermountain
basin of the Rocky Mountain foreland.  Initial production was established in the
basin in 1906 with the discovery of Garland field.  Cumulative  production  from
the basin is in excess of 2.4 BBO and 1.8 TCF of gas. The vast  majority of this
production has come from Paleozoic reservoirs trapped in basin-margin anticlinal
structures.  The majority of major field discoveries (greater than 90 percent of
field total and cumulative production) were made prior to 1950.

     Exploration  Opportunity.  While most of the early exploration in the basin
was the result of mapping of surface structures, recent exploration efforts have
focused  on  the  application  of  detailed   subsurface  mapping  to  delineate
structural  complexities not previously observed.  Because most of the producing
anticlines are structurally  uncomplicated at their surface  expression,  little
exploration  effort  has  historically  been  applied  to  defining   structural
compartmentalization  and secondary  culminations at depth. The advent of modern
geophysical technology,  including the application of 3-D seismic, has increased
the ability to resolve the structural complexity of producing intervals.  Recent
exploration and  exploitation  success at fields such as Gooseberry,  Manderson,
Golden Eagle,  and Enigma have resulted from this increased effort to understand
and delineate smaller-scaled secondary structural features.

     The Company sees multiple exploration and exploitation opportunities in the
basin to  identify  unrecognized  and  untested  structural  culminations  along
producing  trends.  Multiple  potentially  productive  horizons exist on many of
these structural  features creating attractive project economics and exploration
finding costs.  The Company has identified a number of individual  project focus
areas, and has secured a lease position,  covering approximately 2,080 gross and
2,080 net acres,  on its first  exploration  project in the basin.  There are no
immediate plans to commence drilling on this prospect.

     North Zimmerman Butte. The Company has developed an exploration lead, based
on subsurface geological analysis,  north and west of the Zimmerman Butte field.
Zimmerman Butte field was discovered in 1945 and has produced over 1.3 MMBO from
several reservoirs.  The productive area of the field covers less than 350 acres
on a surface  structural feature that extends along trend for approximately five
miles.  Subsurface  analysis has  indicated  the  possible  presence of multiple

                                       15
<PAGE>


subsidiary  structural  features  along  this  structural  trend.  Based  on the
production  potential of these structural leads, the Company renewed a BLM lease
covering  2080  acres.  The  leasehold  position  covers some but not all of the
prospective acreage along the trend. The Company intends to undertake additional
geological and geophysical  analysis  before drilling a test well.  There are no
immediate plans to commence drilling on this project.

Geological and Geophysical Expertise

     The  Company's  oil and gas finding  capabilities  are  dependent  upon the
effective  application  of 3-D  seismic  imaging  technologies.  The Company has
assembled  a  technically   experienced   staff  of  in-house   geologists   and
geophysicists  with extensive  experience  involving the utilization of advanced
seismic data imaging and analysis,  and have  collectively  participated in more
than 100 3-D seismic projects in diverse geological trends.

     The Company  also has access,  both  in-house and through  consultants,  to
state-of-the-art  exploration  hardware and software  applications.  The Company
owns one  computer  aided  exploration  workstation  running  the full  suite of
GeoGraphix  geologic mapping and analysis  software.  Additionally,  the Company
owns  one   geophysical   workstation   employing  SeisX  2-D  and  3-D  seismic
interpretation  and  analysis  software.  Through a  strategic  alliance  with a
Denver-based   3-D  seismic   consulting   firm   (Interactive   Earth  Sciences
Corporation),  the  Company  has full  access  to  multiple  UNIX-based  seismic
interpretation workstations running the complete  Schlumberger/GeoQuest  seismic
analysis software package. Through this relationship,  the Company also has full
access  to GMA  seismic  modeling  software  as well as  Paradigm  Geophysical's
GeoDepth pre-stack depth migration software package.

Drilling Activities

     During 1998, the Company  commenced the drilling of an initial  exploration
well at its East Lost Hills Prospect.  On November 23, 1998, a blowout  occurred
on  this  well.  See  "-- Significant Projects -- Southern  San  Joaquin  Basin,
California".  The Company also drilled one unsuccessful  exploratory well at its
School  Road  project.  The  Company  anticipates  the  drilling of at least two
additional  exploratory  wells  during 1999,  depending  on ongoing  exploration
efforts in California and Colorado.

Production

     The Company  currently does not own any oil or gas production.  The Company
has no immediate plans to acquire or purchase any  production.  The Company also
has no booked reserves at the current time and any near-term  reserve  additions
would result from successful exploration efforts.

Acreage

     The Company currently  controls,  through lease,  farmout,  and option, the
following acreage position as detailed below:

         State                     Gross Acres                 Net Acres
         -----                     -----------                 ---------
         California                  59,914                     30,754
         Colorado                        80                         80
         Wyoming                      2,080                      2,080
         -------                   -----------                 ---------
         TOTAL                       62,074                     32,914

Competitive Advantage

                                       16
<PAGE>


     The Company  believes that the  cumulative  experience of its technical and
management  team,  with  past  exposure  to more than 100 3-D  seismic  projects
covering  approximately 1,500 square miles in diverse geologic trends throughout
the  world  results  in a  strong  competitive  advantage  relative  to  current
competition  in these focus areas.  The Company  currently  has three  full-time
geoscientists  and a  landman  who are  specialists  in a variety  of  technical
aspects  and have  extensive  experience  and  expertise  in  numerous  geologic
regions.

     The   Company's   expertise  in  the   application   of  advanced   seismic
interpretation   methods  includes  many  of  the  "cutting-edge"   technologies
necessary  in  today's  competitive  exploration  environment.   These  advanced
techniques include 3-D seismic visualization, attribute analysis, geostatistical
modeling,  pre-stack  depth  migration,  and the  integration  of geological and
engineering  data in  support  of  reservoir  characterization.  These  advanced
seismic  interpretation  methods  allow the Company to leverage  its 3-D seismic
experience  and  expertise  with   significant   exploration  and   exploitation
opportunities.

     The Company  generates  the majority of its  exploration  and  exploitation
projects internally, and therefore is not dependent on third parties for project
flow. This results in full control of all pre-drill exploration phases including
the acreage position and application of seismic technology.

ITEM 3.  LEGAL PROCEEDINGS

     The  Company is not a party to any  pending  legal  proceeding  (nor is the
Company's  property  subject of a pending  legal  proceeding)  that the  Company
believes would have a material adverse effect on the Company.

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

     Not applicable.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's Common Stock is traded in the over-the-counter market and has
been quoted on the OTC  Bulletin  Board since  November  1996.  Effective  as of
November  12,  1997,  the  Company's  trading  symbol was changed from "MRVI" to
"PYRX".

     The  table  below  presents  the range of high and low bid  prices  for the
Company's Common Stock during each of the quarters  indicated.  These quotations
were obtained  from brokers who make a market in the Company's  Common Stock and
reflect interdealer prices, without retail mark up, mark down or commission, and
may not represent actual transactions.

                                                       Bid Prices
                                                       ----------
       Quarter Ended                              High             Low
       -------------                              ----             ---

     November 30, 1996                            .125            .12
     February 28, 1997                            .0625           .0625
     May 31, 1997                                 .1875           .1875
     August 31, 1997                             1.6875           .25
     November 30, 1997                           2.00            1.4375
     February 28, 1998                           1.875            .6875
     May 31, 1998                                1.4375           .70
     August 31, 1998                             1.1875           .41

                                       17
<PAGE>


     On December 2, 1998,  the closing bid price for the Company's  Common Stock
was $2.25 per share.

Number Of Stockholders Of Record

     On December 2, 1998,  the number of  stockholders  of record of the Company
was approximately 692.


Dividend Policy

     The Company has not declared or paid any cash dividends on its Common Stock
since its formation and does not presently  anticipate paying any cash dividends
on its Common Stock in the foreseeable  future. The Company currently intends to
retain any future earnings to finance the expansion and continued development of
its business.


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

     The following is a discussion and comparison of the financial condition and
results of  operations  of the  Company as of and for the  twelve  months  ended
August 31, 1998  ("1998"),  and as of and for the eight  months ended August 31,
1997 ("1997").  This discussion should be read in conjunction with the Company's
Financial  Statements,  the notes related thereto,  and the other financial data
included elsewhere in this Annual Report on Form 10-KSB.

Overview

     The  Company  is an  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.  The
Company  attempts to leverage its technical  experience  and expertise  with 3-D
seismic to identify  exploration  and  exploitation  projects  with  significant
potential  economic  return.  The  Company  intends to  participate  in selected
exploration  projects as a non-operating,  working interest owner,  sharing both
risk and rewards with its partners.  The Company has pursued,  and will continue
to pursue,  exploration  opportunities  in regions  where the  Company  believes
significant  opportunity  for discovery of oil and gas exists.  By attempting to
reduce  drilling  risk  through 3-D  seismic  technology,  the Company  seeks to
improve  the  expected  return  on  investment  in its oil  and gas  exploration
projects.

     During 1998, the Company incurred  approximately $439,000 for costs related
to continued  leasing and  optioning  of acreage  predominately  in  California,
$2,046,000  for costs  relating to 3-D seismic  acquisition  over its  Southeast
Maricopa  acreage,  and $118,000 in drilling costs  associated with drilling the
deep  exploration  well at East Lost Hills. The Company had no revenues from oil
and gas production during 1998.

                                       18
<PAGE>


     During 1997, the Company incurred approximately $311,000 for acquisition of
acreage and exclusive rights to undertake exploration activities with respect to
its projects. The Company undertook no drilling and had no revenues from oil and
gas  production  during  1997.  To finance its  operations  and obtain funds for
additional  capital  expenditures  relating  to its  exploration  projects,  the
Company sold equity  securities  through  private  placement  offerings  raising
approximately $1,743,000 net to the Company.

     The Company currently  anticipates that it will participate in the drilling
of at least two exploratory  wells during its fiscal year ending August 31, 1999
("1999"),  although the number of wells may increase as additional  projects are
added to the Company's  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.  See "ITEMS 1 AND 2. DESCRIPTION OF BUSINESS AND PROPERTIES-Start-Up
Nature Of The Company's Oil And Gas Business; Absence Of Profits."

     The Company's future financial  results continue to depend primarily on (i)
the Company's ability to discover  commercial  quantities of hydrocarbons;  (ii)
the market  price for oil and gas;  (iii) the  Company's  ability to continue to
source and screen potential  projects;  and (iv) the Company' s ability to fully
implement its  exploration and  development  program.  There can be no assurance
that the Company 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.  See "ITEMS 1 AND 2.  DESCRIPTION  OF BUSINESS  AND
PROPERTIES-Start-Up  Nature of The Company's  Oil And Gas  Business;  Absence Of
Profits," "-  Substantial  Capital  Requirements  And Liquidity" and "- Risks Of
Exploratory Drilling Activities."


Results of Operations

     The twelve  months ended August 31, 1998  ("1998")  compared with the eight
months ended August 31, 1997 ("1997")

     Oil and Gas Revenues and  Expenses.  At August 31, 1998 (and at December 2,
1998),  the Company did not own any producing or proved oil and gas  properties.
No oil and gas  production  revenues  or  expenses  have  been  recorded  by the
Company.  The Company recorded a dry hole impairment of $15,000  associated with
its unsuccessful exploration well drilled in 1998 on its "School Road" acreage.

     Consulting  Fee  Revenue.  The Company  generated  $10,000 and $80,000 from
consulting fees in 1998 and 1997, respectively. These revenues are considered to
be ancillary to the  Company's  focus of  generating  revenues  from oil and gas
production.  These revenues have ceased completely and are not expected to occur
at any time in the future.

     Depreciation, Depletion and Amortization. The Company recorded no depletion
expense from oil and gas  properties in 1998 or 1997. At August 31, 1998 (and at
December 2, 1998), the Company did not own any proved reserves and has no oil or
gas production.  The Company recorded $22,000 and $1,000 in depreciation expense
associated with capitalized office furniture and equipment during 1998 and 1997,
respectively.  The Company also recorded nominal amortization expense associated
with organization costs during 1998 and 1997.

     General and  Administrative  Expense.  The Company  incurred  $675,000  and
$125,000  in  general  and   administrative   expenses  during  1998  and  1997,
respectively.  The increase  results from incurring  costs  associated  with the
hiring of technical personnel, leasing of office space, and legal and accounting
and other costs  associated with  administering  and pursuing the development of
the Company's exploration and exploitation plan. In addition, there is a natural
disparity  occurring  from  comparing a twelve month  period  (1998) to an eight
month period (1997).

     Gain On Sale of Oil and Gas Properties.  During 1998, the Company sold down
a portion of its East Lost Hills  project to  industry  partners  for a total of
$850,000,  resulting in a net gain to the Company of  $556,000.  The Company has
retained a working interest in this property.

                                       19
<PAGE>


     During the fiscal year ended August 31, 1998, the Company's  carrying costs
for  undeveloped   oil  and  gas  properties   increased  by  a  net  amount  of
approximately  $2,180,000.  This net increase is comprised  of  expenditures  on
undeveloped oil and gas prospects of  approximately  $2,689,000,  a reduction in
carrying costs in the prospects  charged to the full cost pool of  approximately
$494,000 from the sale of partial interests in two of the Company's  exploration
projects and a dry hole impairment of $15,000.

     During 1998, the Company incurred $1,936,000 for the 3D seismic acquisition
project at the Company's  Southeast  Maricopa  project,  $549,000 for additional
leasing and outside  seismic  consulting,  $118,000 for the  Company's  share of
drilling costs at the East Lost Hills project,  $54,000 in seismic  reprocessing
costs  associated with the Company's School Road project and $32,000 for outside
geological expenses.

     During 1998,  the Company sold  interests in two of its  prospects,  School
Road and East  Lost  Hills.  Proceeds  of  $200,000  from the sale of a  partial
interest in the School Road prospect were charged  against the full cost pool as
this sale did not  materially  alter the Company's full cost pool as of the date
of  sale.  Proceeds  of  $850,000  were  received  from  the sale of part of the
Company's interest in its East Lost Hills project.  As the sale of this interest
in East Lost Hills was greater than 25% of the Company's undeveloped oil and gas
prospects  as of the  date  of  sale,  gain  was  recognized  in  the  financial
statements  for the year ended August 31, 1998 in the amount of $556,000 and the
Company's  carrying cost of undeveloped oil and gas prospects was reduced by the
basis in the interest sold of $294,000.


Liquidity and Capital Resources

     At August 31, 1998,  the Company had a negative  working  capital amount of
($938,000).  In October  and  November  1998,  the  Company  completed a private
placement  which  provided a total of  $2,500,000  to the  Company.  The private
placement  securities issued are 10% convertible  notes that will  automatically
convert to 10%  convertible  preferred  stock at the time,  if any, that PYR has
obtained stockholder approval for, and issued, the convertible preferred shares.
The preferred stock is ultimately  convertible into common stock at a conversion
price of $.60 per common share.  To date, the Company has funded its oil and gas
exploration  activities  principally  through  cash  provided by the sale of its
securities.

     Cash used in investing  activities  during 1998 totaled  $400,000.  Of this
amount,  $1,407,000  was  used in  conjunction  with the  Company's  oil and gas
exploration and exploitation  plan and $43,000 was used for office furniture and
equipment.  The Company offset these  expenditures  by generating  $1,050,000 in
proceeds from the sale of oil and gas properties.

     The Company had no outstanding long-term debt at August 31, 1998 other than
a  capital  lease  obligation  and has  not  entered  into  any  commodity  swap
arrangements or hedging transactions. Although it has no current plans to do so,
it may enter into commodity swap and/or  hedging  transactions  in the future in
conjunction with oil and gas production. Nevertheless, there can be no assurance
that the Company will ever have oil and gas production. Subsequent to the fiscal
year ended August 31, 1998,  the Company had issued a total of $2,500,000 in 10%
convertible  notes.  These  notes  automatically   convert  to  10%  convertible
preferred stock at the time, if any, that PYR has obtained  stockholder approval
for, and issued, the convertible preferred shares. The Company incurred costs of
approximately $65,000 in connection with the issuance of the notes.

     It is anticipated  that the future  development  of the Company's  business
will require  additional capital  expenditures.  The Company is currently in the
process of interpreting and evaluating 3-D seismic data on two of its California
exploration  projects  and is in the  process  of  drilling  and  evaluating  an
exploration  well at East Lost  Hills.  Depending  upon the  extent of  industry
participation in the two seismic generated exploration projects and the ultimate
results at East Lost Hills,  the Company may require as much as  $4,800,000  for
capital  expenditures  during the 12 month period  ending  August 31, 1999.  See
"ITEMS 1 AND 2.  DESCRIPTION  OF  BUSINESS  AND  PROPERTIES-Substantial  Capital
Requirements And Liquidity".  The Company intends to limit capital  expenditures
by forming  industry  alliances  and  exchanging an  appropriate  portion of its
interest  for cash  and/or  a  carried  interest  in its  exploration  projects.
Although currently there are no commitments for additional funding,  the Company
may need to raise additional funds to cover capital  expenditures.  In addition,
the  exploratory  well at East Lost Hills  experienced a blowout on November 23,
1998.  Although the Company currently believes that costs related to the blowout
and the  release of  potential  pollutants  into the  atmosphere  are covered by
insurance,  there is no  assurance  that this is the case.  Until the blowout is
brought  under  control and the Company and the  operator of the well can assess
the  situation  and  potential  costs,  the Company will not be able to know the
extent of any additional  costs and the possible need for additional  funding to
cover  any  such  costs.  See  "ITEMS  1 AND  2.  DESCRIPTION  OF  BUSINESS  AND
PROPERTIES--Disclosure   Regarding  Forward-Looking  Statements  And  Cautionary
Statements--Cautionary  Statements" and "--Significant  Properties--Southern San
Joaquin Basin, California".

                                       20
<PAGE>


Year 2000 Compliance

     Year 2000  compliance  is the ability of computer  hardware and software to
respond to the problems posed by the fact that computer  programs  traditionally
have used two digits rather than four digits to define an applicable  year. As a
consequence,  any of the Company's  computer  programs that have  date-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
interruption of operations, including temporary inability to perform 3-D seismic
analysis  and to  perform  accounting  functions  and  delays in the  receipt of
payments  from  purchasers  of oil  and gas  production,  if  any.  The  Company
currently is reviewing  the  Company's  computers  and software as well as other
equipment that utilizes imbedded computer chips, such as facsimile  machines and
telephone systems.  The Company believes that its review will be completed prior
to June 30, 1999.  The Company has  confirmed  with the maker of its  accounting
software that it is Year 2000 compliant.

     Until the Company's Year 2000 review has been completed, the Company has no
estimate of the cost to correct any potential deficiency in Year 2000 compliance
for its computers and equipment.  Upon the completion of the Company's Year 2000
review,  the Company intends to develop a contingency plan to address  potential
Year 2000 problems.


ITEM 7.  FINANCIAL STATEMENTS

     The Financial  Statements that constitute Item 7 are attached at the end of
this Annual Report on Form 10-KSB. An index to these Financial Statements is set
forth below:

                                                                         Page
                                                                         ----

     Independent Auditor's Report                                         F-2

     Balance Sheets
              August 31, 1997 and August 31, 1998                         F-3

     Statements of Operations
              Period from Inception (May 31, 1996) to 
              December 31, 1996, Eight Months Ended 
              August 31, 1997 and Year Ended August 31, 1998              F-4

     Statements of Members'/Stockholders' Equity
              Period from Inception (May 31, 1996) to 
              December 31, 1996, Eight Months Ended
              August 31, 1997 and Year Ended August 31, 1998              F-5

     Statements of Cash Flows
              Period from Inception (May 31, 1996) to
              December 31, 1996, Eight Months Ended
              August 31, 1997 and Year Ended August
              31, 1998                                              F-6 - F-7

     Notes To Financial Statements                                  F-8 - F-17

                                       21
<PAGE>


All other schedules are omitted because they are inapplicable,  not required, or
the information is included in the financial statements or notes thereto.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

     Not applicable.

                                    PART III

ITEM 9.  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.

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

D. Scott Singdahlsen      40     Chief Executive Officer,               1997
                                 President, and Chairman
                                 of the Board

Robert B. Suydam          60     Vice President--Geology and Director   1998

Andrew P. Calerich        34     Chief Financial Officer and Secretary   ---

Keith F. Carney           42     Director                               1997



     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
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.

                                       22
<PAGE>


     Robert B.  Suydam has served as a Director  of the  Company  since  October
1998.  Mr.  Suydam has served as  Vice-President  - Geology of the Company since
August 1997 and was  Secretary  of the Company  from August 1997 until May 1998.
Mr. Suydam  co-founded  PYR Energy,  LLC in 1996 and served as Chief  Geologist.
From 1985 until 1996,  Mr. Suydam served as exploration  coordinator  for Snyder
Oil, Gerrity Oil, and Energy Minerals in Denver.  Prior to this employment,  Mr.
Suydam served as Vice President of Exploration for National Oil Company,  and as
Exploration Manager for Hamilton Brothers Oil Company in Denver and Calgary. Mr.
Suydam  started  his  career as an  exploration  geologist  at Texaco in Denver,
Calgary,  and New Orleans. Mr. Suydam earned a B.S. and M.S. in Geology from the
University of Wyoming.

     Andrew P.  Calerich  has served as Chief  Financial  Officer of the Company
since August 1997 and as Secretary of the Company  since May 1998.  From 1993 to
1997,  Mr.  Calerich was a business  consultant  specializing  in accounting for
private oil and gas  producers in Denver.  From 1990 to 1993,  Mr.  Calerich was
employed as corporate Controller at Tipperary Corporation,  a public oil and gas
company  in  Denver.  Mr.  Calerich  began  his  professional  career  in public
accounting in the tax department at Arthur Andersen & Company. Mr. Calerich is a
Certified  Public  Accountant  and earned B.S.  degrees in both  Accounting  and
Business Administration at Regis College.

     Keith F. Carney has served as a Director of the Company  since August 1997.
Since October 1997,  Mr. Carney has been  Executive  Vice-President  of Cheniere
Energy, Inc., a Houston based public oil and gas exploration company.  From July
1997  until  October  1997,  Mr.  Carney  served as Chief  Financial  Officer of
Cheniere Energy.  After earning his M.B.A.  degree from the University of Denver
in 1992,  Mr.  Carney was  employed as a  Securities  Analyst in the oil and gas
exploration/production  sector with Smith  Barney,  Inc.  Mr.  Carney  began his
career as an  exploration  Geologist  at Shell Oil after  earning  B.S. and M.S.
degrees in Geology from Lehigh University.

Other Key Employees - Other key employees of the Company include the following:

     Kenneth R. Berry,  Jr. has served as land  manager  for the  Company  since
October 1997.  Mr. Berry is  responsible  for the  management of all land issues
including  leasing and  permitting.  Mr. Berry has 23 years of  experience as an
independent  landman.  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.

     Lisa A. Mallin has served as  Geologist-CAEX  for the Company  since August
1997.  Ms. Mallin is responsible  for all aspects of computer aided  exploration
including mapping and geophysical  workstation system  administration.  Prior to
joining the Company,  Ms. Mallin served in various  exploration  and  production
capacities with Amoco,  Snyder Oil, Intera Information  Technologies,  NICOR Oil
and Gas,  Louisiana Land and Exploration,  and Amerada Hess. Ms. Mallin earned a
B.A. degree in Geology from the University of Northern Colorado.

Board And Committee Meetings

                                       23
<PAGE>


     The Board of Directors  met seven times during the fiscal year ended August
31, 1998 and all directors were present at each of those meetings.

     The Board of Directors currently has a Compensation Committee which met one
time  during the  fiscal  year ended  August  31,  1998 and both  members of the
Compensation  Committee participated in that meeting. The Compensation Committee
has the authority to establish  policies  concerning  compensation  and employee
benefits for employees of the Company.  The Compensation  Committee  reviews and
makes  recommendations  concerning the Company's  compensation  policies and the
implementation  of those policies and determines  compensation  and benefits for
executive officers.  The Compensation Committee currently consists of the entire
Board. It is anticipated that after the election of additional outside directors
to the Board that the Compensation  Committee will be reelected to consist of at
least two outside directors and not the entire Board of Directors.


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, 1998,  its officers,
directors  and holders of more than 10% of the Company's  common stock  complied
with all Section  16(a) filing  requirements.  In making these  statements,  the
Company  has  relied  upon the  written  representations  of its  directors  and
officers and the  Company's  review of the monthly  statements  of changes filed
with the Company by its officers and directors.


ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

     The following  table sets forth in summary form the  compensation  received
during each of the Company's last three successive  completed fiscal years by D.
Scott Singdahlsen,  the Chief Executive  Officer,  President and Chairman Of The
Board of the Company.  No executive officer of the Company,  including the Chief
Executive Officer and the Chairman Of The Board, received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.

<TABLE>
<CAPTION>

                                          Summary Compensation Table
                                          --------------------------

                                                                           Long Term Compensation
                                                                          ------------------------
                                       Annual Compensation                Awards           Payouts
                             --------------------------------------       ------------------------

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

<S>                          <C>      <C>        <C>         <C>         <C>      <C>       <C>          <C>
D. Scott Singdahlsen         1998     $75,000    $-0-       -0-         -0-      -0-       -0-          -0-
Chief Executive Officer,
President and Chairman       1997     $10,250     -0-       -0-         -0-      -0-       -0-          -0-
Of the Board
                             1996        --        --        --          --       --        --           --


                                       24
</TABLE>

<PAGE>

----------

(1) The dollar value of base salary (cash and non-cash) received during the year
indicated.  Includes  $4,000 paid as consulting  fees to Mr.  Singdahlsen by PYR
Energy, LLC during the period from January 1, 1997 through August 6, 1997.

(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, the Company did
not pay any other  annual  compensation  not properly  categorized  as salary or
bonus,  including  perquisites  and  other  personal  benefits,   securities  or
property.

(4) The  Company  does 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 the Company's 1997 Stock Option Plan.

(5) All other  compensation  received that the Company 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.



1997 Stock Option Plan

     In August 1997,  the Company's 1997 Stock Option Plan (the "1997 Plan") was
adopted by the Board of  Directors of the Company and  subsequently  approved by
the  Company's  stockholders.  Pursuant to the 1997 Plan,  the Company may grant
options to purchase an  aggregate of 1,000,000  shares of the  Company's  Common
Stock to key employees, directors, and other persons who have contributed or are
contributing to the success of the Company.  The options granted pursuant to the
1997  Plan  may be  either  incentive  options  qualifying  for  beneficial  tax
treatment  for the  recipient  or  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,  1998,  options to  purchase  246,000  shares were
outstanding under the 1997 Plan.  Options to purchase 435,000  additional shares
subsequently  were  granted and options to purchase  7,500  shares  subsequently
terminated so that, as of December 2, 1998,  options to purchase  326,500 shares
may be granted pursuant to the 1997 Plan.

Compensation Of Outside Directors

     On May 26, 1998,  each  Director of the Company who is not also an employee
of the  Company  ("Outside  Director")  was granted  options to purchase  10,000
shares of Common Stock.  The Options are exercisable for $1.28 per share,  which
was the average of closing bid and ask price of the Common  Stock on the date of
grant.  Options to purchase 2,500 shares become exercisable on each of September
1, 1998 and  December  1, 1998,  and  options to purchase  2,500  shares  become
exercisable on each of March 1, 1999 and June 1, 1999 if the person continues to
be an Outside Director through those each of those dates. All the options expire
on May 26,  2001.  Directors  also  are  reimbursed  for  expenses  incurred  in
attending meetings and for other expenses incurred on behalf of the Company.

                                       25
<PAGE>


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

     The Company does not have any written employment  contracts with respect to
any of its officers or other employees.  The Company has no compensatory plan or
arrangement that results or will result from the resignation, retirement, or any
other termination of an executive officer's  employment with the Company or from
a  change-in-control  of the  Company  or a  change  in an  executive  officer's
responsibilities  following  a  change-in-control,  except  that the  1997  Plan
provides for vesting of all  outstanding  options in the event of the occurrence
of a change-in-control.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of December 2, 1998,  there were 9,421,470 shares of the Company's $.001
par value common stock (the "Common  Stock")  outstanding.  The following  table
sets forth  certain  information  as of  December 2, 1998,  with  respect to the
beneficial  ownership of the  Company's  Common Stock by each  director,  by all
executive  officers and directors as a group,  and by each other person known by
the  Company  to be the  beneficial  owner  of more  than  five  percent  of the
Company's Common Stock:








                                       26
<PAGE>


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

D. Scott Singdahlsen                    2,000,000                   21.2%
1675 Broadway, Suite 1150
Denver, Colorado 80202

Robert B. Suydam                        1,300,000(2)                13.8%
1675 Broadway, Suite 1150
Denver, Colorado 80202

Keith F. Carney                         110,000 (3)                  1.2%
915 Bay Oaks Road
Houston, Texas 77008

All Executive Officers and 
Directors as a group (four persons)     3,437,500(2)(3)(4)          36.4%

PinOak Inc.                             1,300,000 (2)               13.8%
5037 South Oak Court
Littleton, Colorado 80127

Victory Oil Company                     1,773,333(5)                16.0%
222 West Sixth Street, Suite 1010
San Pedro, California 90731

Whittier Trust Company                  556,734(6)                   5.6%
1600 Huntington Drive
South Pasadena, California


----------

(1) "Beneficial ownership" is defined in the regulations promulgated by the U.S.
Securities and Exchange Commission as having or sharing,  directly or indirectly
(i) voting power,  which includes the power to vote or to direct the voting,  or
(ii)  investment  power,  which  includes  the power to dispose or to direct the
disposition,  of shares  of the  common  stock of an  issuer.  Unless  otherwise
indicated, the beneficial owner has sole voting and investment power.

(2) The  shares  shown  for Mr.  Suydam  are  owned of  record  by  PinOak  Inc.
("PinOak").  These  shares are included  twice in the table.  They are listed as
being held beneficially by both PinOak and by Mr. Suydam. PinOak is owned by Mr.
Suydam's wife and Mr. Suydam is the President of PinOak.

(3) Includes  options to purchase  5,000 shares at $1.28 per share until May 26,
2001 that currently are excercisable or that will become  exercisable within the
next 60 days.

(4) Includes 2,500 shares of Common Stock and options to purchase  25,000 shares
of Common Stock that currently are excercisable or that will become  exercisable
within the next 60 days that are held by Andrew P. Calerich, the Chief Financial
Officer and Secretary of the Company.

                                       27
<PAGE>


(5)  Includes  1,666,667  shares of  Common  Stock  that may be issued  upon the
conversion  of  convertible  promissory  notes held by Victory Oil Company.  See
"Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"

(6) As reported in the Schedule 13D filed by Victory Oil Company, Whittier Trust
Company and other filing parties on November 5, 1998. The Company  believes that
these  shares  consist  of  shares  Common  Stock  that may be  issued  upon the
conversion  of  convertible  promissory  notes held by various  holders for whom
Whittier  Trust  Company  serves as trustee  and/or agent See "Item 12.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS"


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Acquisition Of PYR Energy, LLC
------------------------------

     The Company  acquired  all the  ownership  interest  in PYR Energy,  LLC on
August 6, 1997 in exchange for 4,000,000  shares of the Company's  Common Stock.
Mr. Singdahlsen  received 2,000,000 shares of the Company's Common Stock in that
transaction  in  exchange  for the 50 percent of PYR  Energy,  LLC that he owned
immediately  prior to the transaction.  PinOak, a company of which Mr. Suydam is
the  President  and  whose  sole  shareholder  is Mr.  Suydam's  wife,  received
1,300,000  shares of the Company's  Common Stock in that transaction in exchange
for PinOak's ownership of 32.5 percent of the ownership interests in PYR Energy,
LLC immediately  prior to the transaction.  In connection with that transaction,
the Company agreed to appoint each of Messrs. Singdahlsen, Carney and Gregory B.
Barnett to constitute all the members of the Company's Board Of Directors.

Loan To PYR Energy, LLC
-----------------------

     In June 1997, PYR Energy,  LLC borrowed  $275,000 from the Company in order
to fund certain of PYR Energy,  LLC's obligations  pursuant to PYR Energy, LLC's
lease  and  seismic  option  in the  San  Joaquin  basin.  See  "ITEMS  1 AND 2.
DESCRIPTION OF BUSINESS AND PROPERTIES".  PYR Energy, LLC secured that loan with
a pledge of PYR Energy, LLC's interest in the lease and seismic option. The loan
accrued interest at a rate of eight percent per annum, interest being payable at
the end of each  calendar  quarter.  The loan was  effectively  eliminated  upon
consummation of the Company's acquisition of PYR Energy, LLC.

Sale Of Assets To former Director And Officer
---------------------------------------------

     Effective as of August 6, 1997, the Company sold all the assets not related
to  the  Company's  business  of  oil  and  gas  exploration,   development  and
consulting,  and not  related  to the  Company's  principal  office  in  Denver,
Colorado, to Buddy Young, a stockholder and a former director and officer of the
Company.  The purchase  price for the assets was $32,000,  which was paid in the
form of a release from Mr. Young to the Company of the  Company's  obligation to
repay the  $32,000  it owed to Mr.  Young.  The  Company's  approximate  $32,000
obligation to Mr. Young had been incurred through advances from Mr. Young to the
Company for working capital purposes.  At August 6, 1997, there were outstanding
$17,852 of accounts receivable related to the assets that Mr. Young obtained the
right to receive.  Mr. Young also assumed all liabilities related to the assets.
The Company  also  assigned to Mr. Young the lease for the  Company's  office in
Encino,  California,  and Mr. Young assumed the Company's  obligations under the
lease.  The  Company  obtained  a  release  from  the  landlord  for  additional
obligations under the lease.

                                       28
<PAGE>


     In addition to the accounts receivable  described above, the assets sold to
Mr. Young  consisted  primarily of the Company's  interests in three  television
programs,  "Heartstoppers . . . At The Movies",  a two-hour  television  program
hosted by George  Hamilton,  "Christmas  At The Movies",  a one-hour  television
program  hosted  by  Gene  Kelly,  and  "It's  A  Wonderful  Life  - A  Personal
Remembrance",  an  approximately  15-minute  television  program hosted by Frank
Capra, Jr., and the office furniture and supplies in the Company's former office
in Encino,  California.  The television programs previously had been held by the
Company for  licensing to various  television  and cable  television  operators.
During the year ended August 31, 1997,  the Company  received  licensing fees of
$15,216 for the television programming assets sold to Mr. Young. The low revenue
amount was mainly due to the programs'  previously  having been licensed in most
major  territories.  Because,  as a result of the Company's  acquisition  of PYR
Energy,  LLC,  the Company  determined  to focus its  activities  on oil and gas
exploration,  development  and consulting and to locate its principal  office in
Denver,  Colorado,  the Company  determined that it was in its best interests to
sell the assets of the  Company  that were not related to this  business  and to
assign its office lease in Encino, California.

Private Placement Of Notes
--------------------------

     In November 1998, the Company completed the sale of convertible  promissory
notes (the  "Notes") in the total amount of  $2,500,000  in a private  placement
transaction   pursuant  to  exemptions  from  federal  and  state   registration
requirements.  Victory Oil Company ("Victory")  purchased $1.0 million of Notes,
and parties  related to Whittier Energy Company  ("WEC")  purchased  $500,000 of
Notes. The remaining $1.0 million of Notes were sold to other investors.

     In  connection  with the sale of  Notes,  the  Company  agreed  to add S.L.
Hutchison and Bryce W. Rhodes to the Board of Directors.  Messrs.  Hutchison and
Rhodes have been  nominated  for election as directors at the Annual  Meeting of
Stockholders  pursuant to this agreement.  Mr.  Hutchison is the Chief Financial
Officer of Victory and Mr. Rhodes is the Vice President of WEC.

     The Notes will  automatically  convert  into  shares of Series A  Preferred
Stock  (the  "Series  A  Preferred")  at the rate of one  share  for  each  $100
principal  amount of Notes if the Series A Preferred is approved by stockholders
prior to April 23, 1999. The Series A Preferred is convertible into Common Stock
at the rate of one  share of Common  Stock  for each  $.60 of the  amount of the
Series A  Preferred.  If approval of the Series A Preferred  is not  obtained by
April 23,  1999,  the Note  holders  have the right to  require  that  Notes and
accrued  interest be paid on demand or to convert the Notes into Common Stock at
the rate of one share of Common Stock for each $.30 of principal amount of Notes
rather than the conversion  rate of one share of Common Stock for each $.60 face
amount of the Series A  Preferred.  The full  principal  amount of the Notes and
accrued  interest  at the rate of 10 percent per year is due on October 26, 1999
if the Notes have not been  converted  into Series A Preferred  or Common  Stock
prior to that  time.  The  Company  has the right in its  discretion  to pay the
interest  portion of the Notes with Common Stock at a rate based on the weighted
average  trading  price of the Common  Stock for 45 days  prior to the  interest
payment date.

     The holders of the Series A Preferred,  as a separate class, have the right
to elect two  members of the Board of  Directors  of the  Company  when at least
10,000 shares of Series A Preferred are outstanding. When more than 5,000 shares
but fewer than 10,000 shares of Series A Preferred are outstanding,  the holders
of  Series A  Preferred  have the  right to elect  one  member  of the  Board of
Directors. The Board of Directors currently consists of six members and the size
of the Board may not be increased without the approval of the investors.

                                       29
<PAGE>


     As a condition to the sale of the Notes, D. Scott Singdahlsen and Robert B.
Suydam,  who are  directors  and officers of the Company,  entered into a voting
agreement ("Voting Agreement") with the purchasers of the Notes. Pursuant to the
Voting Agreement, each of Mr. Singdahlsen and Mr. Suydam agreed that each of Mr.
Singdahlsen  and Mr.  Suydam  will vote all the  shares  of Common  Stock of the
Company  owned by him in favor of the election of two nominees of the  investors
to serve on the Board of  Directors  of the Company and for the  re-election  of
those  nominees  or other  nominees  at any time that the  aggregate  percentage
ownership  of common  equity  of the  Company  underlying  the Notes or Series A
Preferred owned by the investors is 20 percent or more of the outstanding Common
Stock. Mr.  Singdahlsen and Mr. Suydam are required to vote for only one nominee
at any time after the  aggregate  percentage  ownership of common  equity of the
Company owned by the investors is less than 20 percent and greater than or equal
to 10 percent of the outstanding Common Stock. The obligation of Mr. Singdahlsen
and Mr. Suydam to vote for any nominees of the investors  terminates at any time
after the  percentage  ownership  of common  equity of the Company  owned by the
investors  is  less  than  10  percent  of the  outstanding  Common  Stock.  Mr.
Singdahlsen  and Mr.  Suydam are not required to vote for the  designated  board
members at any time that the  holders of the Series A  Preferred  have the right
voting separately as a class to elect those designated board members.

     Also as a condition to the  investors'  purchase of the Notes,  the Company
entered into an agreement with Victory, WEC, and Catalina Properties Corporation
("Catalina")  pursuant to which  Victory,  WEC and  Catalina  contributed  their
interests in  approximately  5,000 gross acres of leasehold as well as access to
39  square  miles of  existing  of 3-D  seismic  data  adjoining  the  Company's
Southeast Maricopa "Stevens" Exploration Project in California. As consideration
for these  interests,  the Company issued  106,666 shares to Victory,  80,000 to
WEC, and 80,000 to Catalina, for an aggregate of 266,666 shares.

     Except as  described  above,  during the fiscal year ended August 31, 1998,
there were no  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.

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

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

     See "ITEM 7. FINANCIAL STATEMENTS".

(a)(3)  Exhibits.
        ---------
                                  Exhibit Index


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

3.1       Certificate  Of  Incorporation  filed with the  Delaware  Secretary Of
          State on March 27, 1996 (1)

3.2       Certificate Of Amendment to the Certificate Of Incorporation effective
          as of November  12, 1997 filed with the  Delaware  Secretary Of State.
          (5)

3.3       Bylaws (1)

                                       30
<PAGE>


4.1       Specimen Common Stock Certificate (4)

4.2       Specimen Class A Warrant (4)

4.3       Specimen Class B Warrant (4)

10.1      Asset  Transfer,  Assignment and Assumption  Agreement dated April 16,
          1996 between the Registrant and Bexy Communications, Inc. (2)

10.2      Form of Purchase And Sale Agreement  dated as of July 31, 1997 between
          the Registrant and a member of PYR Energy, LLC (4)

10.3      Purchase And Sale Agreement effective as of August 6, 1997 between the
          Registrant and Buddy Young (4)

10.4      1997 Stock Option Plan (3)

10.5      Convertible Note Purchase Agreement dated October 26, 1998 between the
          Registrant and various investors (6)

27.1      Financial Data Schedule

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

(1)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form 10-SB filed with the  Securities  And Exchange  Commission  ("SEC") on
     June 18, 1996, File No. 0-20879.

(2)  Incorporated  by  reference  from  the  Registrant's  Amendment  No.  1  to
     Registration  Statement  on Form 10-SB  filed with the SEC on July 3, 1996,
     File No. 0-20879.

(3)  Incorporated  by reference from the  Registrant's  Preliminary  Information
     Statement filed with the SEC on October 8, 1997.

(4)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form SB-2 filed with the SEC on October 24, 1997, File No. 333-38665.

(5)  Incorporated by reference from the Registrant's Form 10-KSB/A1 for the year
     ended August 31, 1997.

(6)  Incorporated  by  reference  from  Exhibit 2 to the  Schedule  13D filed by
     Victory Oil Company and other filing parties on November 5, 1998.


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

     During the fourth  quarter of the fiscal year ended  August 31,  1998,  the
Registrant  filed (i) six  Current  Reports on Form 8-K  reporting  events  that
occurred on June 1, 1998,  June 9, 1998,  June 30, 1998, July 16, 1998, July 28,
1996, and July 30, 1998. Subsequent to August 31, 1998 and prior to filing their
Annual Report on Form 10-KSB, the Registrant filed three Current Reports on Form
8-K reporting  events that occurred on September 18, 1998 October 27, 1998,  and
November 24, 1998.


                                       31

<PAGE>



                                   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: March 12, 1999                        By: /s/ D. Scott Singdahlsen
                                               -------------------------
                                               D. Scott Singdahlsen, 
                                               Chief Executive Officer


     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.

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



/s/ D. Scott Singdahlsen        Chief Executive Officer,        March 12, 1999
------------------------        President and Chairman 
D. Scott Singdahlsen            Of The Board   



/s/ Keith F. Carney             Director                        March 12, 1999
------------------------
Keith F. Carney



/s/ Robert B. Suydam            Vice President-Geology          March 12, 1999
------------------------        and Director
Robert B. Suydam



/s/ Andrew P. Calerich          Chief Financial Officer         March 12, 1999
------------------------        and Secretary
Andrew P. Calerich



                                       32

<PAGE>
                             PYR ENERGY CORPORATION
                          (A Development Stage Company)






                                      INDEX


     Independent Auditor's Report                                     F-2

     Balance Sheets
         August 31, 1997 and 1998                                     F-3

     Statements of Operations
         Period from Inception (May 31, 1996) to
         December 31, 1996, Eight Months Ended
         August 31, 1997 and Year Ended August 31, 1998               F-4

     Statements of Members'/Stockholders' Equity
         Period from Inception (May 31, 1996) to
         December 31, 1996, Eight Months Ended
         August 31, 1997 and Year Ended August 31, 1998               F-5

     Statements of Cash Flows
         Period from Inception (May 31, 1996) to
         December 31, 1996, Eight Months Ended
         August 31, 1997 and Year Ended August 31, 1998               F-6 - F-7

     Notes to Financial Statements                                    F-8 - F-17





                                      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,  1997 and 1998 and the  related
statements of operations,  members'/stockholders'  equity and cash flows for the
period from  inception (May 31, 1996) to December 31, 1996, for the eight months
ended August 31, 1997 and for the year ended August 31,  1998.  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  generally   accepted  auditing
standards. 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, 1997 and 1998,  and the results of its  operations and its cash flows
for the period from inception (May 31, 1996) to December 31, 1996, for the eight
months  ended  August  31,  1997  and for the  year  ended  August  31,  1998 in
conformity with generally accepted accounting principles.


                              WHEELER WASOFF, P.C.


Denver, Colorado
October 26, 1998, except for Note 10(c)
as to which the date is November 23, 1998.


                                      F - 2
<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                                 BALANCE SHEETS

                                     ASSETS
                                                      August 31,      August 31,
                                                        1997            1998
                                                        ----            ----
CURRENT ASSETS
 Cash                                                $ 1,432,281    $   373,100
 Accounts receivable                                      10,000           --
 Prepaid expenses                                          4,196         16,897
                                                     -----------    -----------

  Total Current Assets                                 1,446,477        389,997
                                                     -----------    -----------

PROPERTY AND EQUIPMENT, at cost                          339,547      2,546,059
                                                     -----------    -----------

OTHER ASSETS                                               3,642          3,546
                                                     -----------    -----------

                                                     $ 1,789,666    $ 2,939,602
                                                     ===========    ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES

 Accounts payable                                    $    60,064    $    44,389
 Accrued property exploration and seismic costs           10,184      1,282,500
 Current portion of capital lease obligation                --            1,441
                                                     -----------    -----------

  Total Current Liabilities                               70,248      1,328,330
                                                     -----------    -----------

CAPITAL LEASE OBLIGATION                                    --            2,661
                                                     -----------    -----------

COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY
 Common stock, $.001 par value
  Authorized 30,000,000 shares
  Issued and outstanding 9,154,804 shares                  9,155          9,155
 Capital in excess of par value                        1,768,088      1,768,088
 Deficit accumulated during the development stage        (57,825)      (168,632)
                                                     -----------    -----------

                                                       1,719,418      1,608,611
                                                     -----------    -----------

                                                     $ 1,789,666    $ 2,939,602
                                                     ===========    ===========




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

                                      F - 3


<PAGE>
<TABLE>
<CAPTION>



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




                                                                                                            Cumulative
                                                    Inception         Eight Months          Year               from
                                                  (May 31, 1996)         Ended              Ended          Inception to
                                                  to December 31,      August 31,         August 31,        August 31,
                                                       1996               1997               1998              1998
                                                       ----               ----               ----              ----
REVENUES
<S>                                                <C>                <C>                <C>                <C>        
 Consulting fees                                   $    37,528        $    80,000        $    10,000        $   127,528
 Interest                                                 --                5,596             36,145             41,741
                                                   -----------        -----------        -----------        -----------

                                                        37,528             85,596             46,145            169,269
                                                   -----------        -----------        -----------        -----------

OPERATING EXPENSES
 General and administrative                             18,518            125,161            675,245            818,924
 Dry hole impairment                                      --                 --               15,000             15,000
 Interest                                                 --                  351                488                839
 Depreciation and amortization                              47              1,004             22,416             23,467
                                                   -----------        -----------        -----------        -----------

                                                        18,565            126,516            713,149            858,230
                                                   -----------        -----------        -----------        -----------

OTHER INCOME
 Gain on sale of oil and gas prospects                    --                 --              556,197            556,197
                                                   -----------        -----------        -----------        -----------

                                                        18,963            (40,920)          (110,807)          (132,764)

INCOME APPLICABLE TO
 PREDECESSOR LLC (Note 1)                              (18,963)           (16,905)              --              (35,868)
                                                   -----------        -----------        -----------        -----------

NET (LOSS)                                         $      --          $   (57,825)       $  (110,807)       $  (168,632)
                                                   ===========        ===========        ===========        ===========

NET INCOME (LOSS) PER
 COMMON SHARE - BASIC AND DILUTED (Note 2)         $      .005        $     (.009)       $     (.012)       $     (.026)
                                                   ===========        ===========        ===========        ===========

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES
 OUTSTANDING (Note 2)                                4,000,000          4,644,351          9,154,804          6,481,943
                                                   ===========        ===========        ===========        ===========






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

                                                          F - 4

</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                                     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 YEAR ENDED AUGUST 31, 1998

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

<S>                                                           <C>            <C>           <C>           <C>            <C>      
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     1,768,088        (57,825)
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


</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                                     PYR ENERGY CORPORATION
                                                  (A Development Stage Company)
                                                    STATEMENTS OF CASH FLOWS

                                                                   Inception        Eight Months         Year
                                                                (May 31, 1996)         Ended             Ended           Cumulative
                                                                to December 31,      August 31,        August 31,       Amounts from
                                                                      1996              1997              1998           Inception
                                                                      ----              ----              ----           ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                               <C>               <C>               <C>               <C>         
 Net income (loss)                                                $    18,963       $   (40,920)      $  (110,807)      $  (132,764)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities
   Depreciation and amortization                                           47             1,004            22,416            23,467
   Contributed services                                                12,000            24,000              --              36,000
   Gain on sale of oil and gas prospects                                 --                --            (556,197)         (556,197)
   Dry hole impairment                                                   --                --              15,000            15,000
 Changes in assets and liabilities
  (Increase) decrease in accounts receivable                             (527)           (9,473)           10,000              --
  (Increase) in prepaids                                                 --              (2,591)          (12,700)          (15,291)
  Increase (decrease) in accounts payable                                 527            45,103           (15,675)           29,955
  Increase (decrease) in accrued expenses                                --              10,183           (10,183)             --
  Other                                                                  (474)           (3,277)             --              (3,751)
                                                                  -----------       -----------       -----------       -----------

 Net cash provided (used) by operating activities                      30,536            24,029          (658,146)         (603,581)
                                                                  -----------       -----------       -----------       -----------


CASH FLOWS FROM INVESTING ACTIVITIES
 Cash paid for furniture and equipment                                   --             (29,481)          (43,407)          (72,888)
 Cash paid for undeveloped oil and gas properties                        --            (298,178)       (1,406,613)       (1,704,791)
 Proceeds from sale of oil and gas properties                            --                --           1,050,078         1,050,078
                                                                  -----------       -----------       -----------       -----------

 Net cash (used) in investing activities                                 --            (327,659)         (399,942)         (727,601)
                                                                  -----------       -----------       -----------       -----------


CASH FLOWS FROM FINANCING ACTIVITIES
 Members capital contributions                                          5,000            23,000              --              28,000
 Distributions to members                                             (24,000)          (42,000)             --             (66,000)
 Cash from short-term borrowings                                         --             285,000              --             285,000
 Proceeds from sale of common stock                                      --            (285,000)             --            (285,000)
 Cash paid for offering costs                                            --           2,023,750              --           2,023,750
 Cash paid for offering costs                                            --            (280,711)             --            (280,711)
 Cash received upon recapitalization and merger                          --                 336              --                 336
 Payments on capital lease                                               --                --              (1,093)           (1,093)
                                                                  -----------       -----------       -----------       -----------

 Net cash (used) provided by financing activities                     (19,000)        1,724,375            (1,093)        1,704,282
                                                                  -----------       -----------       -----------       -----------


NET INCREASE (DECREASE) IN CASH                                        11,536         1,420,745        (1,059,181)          373,100

CASH, BEGINNING OF PERIODS                                               --              11,536         1,432,281              --
                                                                  -----------       -----------       -----------       -----------

CASH, END OF PERIODS                                              $    11,536       $ 1,432,281       $   373,100       $   373,100
                                                                  ===========       ===========       ===========       ===========


                             The accompanying notes are an integral part of the financial statements
                                          
                                                               F - 6
</TABLE>

<PAGE>

                             PYR ENERGY CORPORATION
                          (A Development Stage Company)
                      STATEMENTS OF CASH FLOWS (CONTINUED)
           PERIOD FROM INCEPTION (MAY 31, 1996) TO DECEMBER 31, 1996,
        EIGHT MONTHS ENDED AUGUST 31, 1997 AND YEAR ENDED AUGUST 31, 1998


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     During the eight  months  ended  August 31, 1997 the Company  paid cash for
     interest on short term borrowings of $351.

     During the year ended August 31, 1998 the Company paid cash for interest of
     $488 on a capital lease.

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     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 (Notes 1 and 3).

     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.


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







                                      F - 7

<PAGE>

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



NOTE 1 - ORGANIZATION AND BUSINESS COMBINATION

     PYR Energy  Corporation (the "Company"),  is an independent  energy company
     engaged in the  exploration  and  acquisition  of crude oil and natural gas
     reserves  in  the  Western  United  States,  including  California,  and is
     considered a development stage company as defined by Statement of Financial
     Accounting Standards (SFAS) No. 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.   As  of  August  31,  1997  PYR  LLC  had  acquired  only
     non-producing  leases and acreage and no exploration  had been commenced on
     the  properties.  Effective  August 6, 1997, Mar  transferred to its former
     president substantially all its assets and liabilities that were related to
     its film library  operations.  The net assets of Mar exchanged  pursuant to
     the transaction with PYR LLC are as follows:


                             Cash          $   336
                             Assets          1,605
                             Liabilities    (1,605)
                                           -------

                                           $   336
                                           =======


     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 accompanying financial statements as of
     December  31, 1996 and August 31,  1997 and for the periods  then ended are
     those of PYR LLC.  The  operations  of PYR LLC will be the only  continuing
     operations of the Company.

     Prior to the  business  combination,  Mar  loaned  $275,000  to PYR LLC for
     amounts  owed by PYR LLC with  respect to its oil and gas  operations.  The
     loan was  eliminated in conjunction  with the successful  completion of the
     combination of PYR LLC and Mar.

     The  Company is an  exploration  stage oil and gas company and as of August
     31, 1998, has not earned any production  revenue nor found proved  reserves
     on any of its properties.  The Company's  efforts,  since August 1997, have
     been in 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. (See Note 10 (c)).


                                      F - 8
<PAGE>

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



NOTE 1 - ORGANIZATION AND BUSINESS COMBINATION (CONTINUED)

     The Company's ability to continue operations is dependent on finding proved
     reserves,  achieving positive cash flow from production revenue, conversion
     of notes to Series A  Preferred  Stock (See Note 10 (a))  and/or  obtaining
     additional  financing and the continuation of entering into agreements with
     industry  partners  for the  exploration  and ultimate  development  of the
     Company's  oil and gas  prospects.  Although cash received from the sale of
     convertible  debt in October  1998 (See Note 10 (a)) may be  sufficient  to
     sustain  operations  for the fiscal year ended August 31, 1999,  management
     intends  to  obtain  additional   funding  for  corporate   operations  and
     exploration  of  properties  by  entering  into  agreements  with  industry
     partners for sale and purchase of  interests in the  Company's  oil and gas
     prospects and participation in the exploration of these prospects.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PROPERTY AND EQUIPMENT

     Furniture and equipment is recorded at cost.  Depreciation and amortization
     of assets  under  capital  lease 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.

     OIL AND GAS PROPERTIES

     The  Company  follows  the full cost  method to account for its 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 such  properties  are  evaluated as
     either  proved or  unproved.  The net  capitalized  costs are  subject to a
     ceiling  limitation.  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. A separate cost center is maintained for expenditures  applicable
     to  each  country  in  which  the  Company  conducts  exploration  and/  or
     production activities.

     Undeveloped oil and gas prospects consist of leases and acreage acquired by
     the Company for its' exploration and development activities,  including the
     cost of seismic data  acquisition  and  evaluation,  and drilling costs for
     exploration  wells. The cost of these  non-producing  leases is recorded at
     the lower of cost or fair market value.



                                      F - 9
<PAGE>

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



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     The Company has adopted  SFAS No. 121  "Accounting  for the  Impairment  of
     Long-Lived  Assets  and for  Long-Lived  Assets  to Be  Disposed  of" which
     requires  that  long-lived  assets  to be held  and  used be  reviewed  for
     impairment  whenever events or changes in  circumstances  indicate that the
     carrying  amount of an asset may not be  recoverable.  The adoption of SFAS
     121 has not had an impact on the  Company's  financial  statements,  as the
     Company  has  determined  that no  impairment  loss  for  1998  needs to be
     recognized for applicable assets of continuing operations.

     ORGANIZATION COSTS

     Costs related to the  organization of the Company have been capitalized and
     are being amortized over a period of five years.

     INCOME TAXES

     The Company has adopted the  provisions  of SFAS No. 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.

     PYR LLC was taxed as a Limited  Liability Company until August 6, 1997, and
     as such was not  subject to federal  and state  income  tax.  Earnings  and
     losses  through that date were  included in the personal tax returns of its
     members, and PYR LLC did not record an income tax provision.

     At August 31, 1998,  the Company had a net operating loss  carryforward  of
     approximately  $85,000 that may be offset  against  future  taxable  income
     through 2013.

     The Company has fully  reserved the $21,000 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.  The
     total tax benefit is attributable to 1997.

     Temporary  differences  between  the time of  reporting  certain  items for
     financial and tax reporting purposes consist primarily of exploration costs
     on oil and gas properties.

     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.


                                     F - 10
<PAGE>

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



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     INCOME (LOSS) PER SHARE

     (Loss)  per  common  share at  August  31,  1998 is  computed  based on the
     weighted average number of common shares outstanding during the period then
     ended.  Common shares  issued to the members of PYR LLC upon  completion of
     Mar's  merger  with PYR LLC  (Note 1) are  considered  outstanding  for all
     periods presented.  Convertible equity  instruments,  such as stock options
     and warrants,  are not considered in the  calculation of net loss per share
     as their inclusion would be antidilutive.

     Income (loss) per share has been computed on a pro forma basis based on the
     income (loss) of PYR LLC for the period from inception to December 31, 1996
     and the eight months ended August 31, 1997 as if PYR LLC was a  corporation
     and not a limited  liability  company,  which  distributes its earnings and
     losses to its members.

     SHARE BASED COMPENSATION

     In October 1995, SFAS No. 123 "Accounting for Stock-Based Compensation" was
     issued.  This new standard  defines a fair value based method of accounting
     for an employee stock option or similar equity  instrument.  This statement
     gives  entities a choice of  recognizing  related  compensation  expense by
     adopting the new fair value  method or to continue to measure  compensation
     using the intrinsic value approach under Accounting  Principles Board (APB)
     Opinion  No.  25.  The  Company  has  elected  to  utilize  APB No.  25 for
     measurement;  and will,  pursuant to SFAS No. 123, disclose  supplementally
     the pro forma effects on net income and earnings per share of using the new
     measurement  criteria.  During the eight months ended August 31, 1997,  the
     Company issued options to purchase shares of its common stock (Note 4). The
     effect of this  issuance on pro forma net income and  earnings per share is
     not material.

     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.  At August 31, 1997 and 1998, there
     were no cash equivalents.

     NEW TECHNICAL PRONOUNCEMENTS

     In February 1997 SFAS No. 128,  "Earnings  Per Share" was issued  effective
     for periods  ending  after  December  15,  1997.  There is no impact on the
     Company's financial statements from adoption of SFAS No. 128.

     In February 1997 SFAS No. 129,  "Disclosure  of  Information  about Capital
     Structure" was issued effective for periods ending after December 15, 1997.
     The Company has adopted the disclosure provisions of SFAS No. 129 effective
     with the fiscal year ended August 31, 1998.

     In June 1997 SFAS No. 130, "Reporting Comprehensive Income", was issued for
     fiscal years beginning  after December 31, 1997,  with earlier  application
     permitted. The Company has elected to adopt SFAS No. 130 effective with the
     fiscal  year  ending  August  31,  1999.  Adoption  of SFAS No.  130 is not
     expected to have a material impact on the Company's financial statements.

                                     F - 11
<PAGE>


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


     In June 1997 SFAS No. 131,  "Disclosure about Segments of an Enterprise and
     Related  Information" was issued effective for fiscal years beginning after
     December 31,  1997,  with earlier  application  permitted.  The Company has
     elected to adopt SFAS No. 131 effective  with the fiscal year ending August
     31,  1999.  Adoption  of SFAS No.  131 is not  expected  to have a material
     impact on the Company's financial statements.

     In February 1998 SFAS No. 132,  "Employers'  Disclosure  about Pensions and
     Other  Postretirement  Benefits",  was issued  effective  for fiscal  years
     beginning after December 15, 1997, with earlier application encouraged. The
     Company  has elected to adopt SFAS No. 132  effective  with the fiscal year
     ending August 31, 1999.  Adoption of SFAS No. 132 is not expected to have a
     material impact on the Company's financial statements.

     In June 1998 SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
     Hedging  Activities",  was issued for fiscal years beginning after June 15,
     1999. Adoption of SFAS No. 133 is not expected to have a material impact on
     the Company's financial statements.

NOTE 3 - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

                                                    August 31,     August 31,
                                                       1997           1998
                                                       ----           ----

     Furniture and equipment                       $    29,481    $    72,888
     Asset under capital lease                            --            5,195
                                                   -----------    -----------
                                                        29,481         78,083

     Less accumulated depreciation 
      and amortization                                    (941)       (23,262)
                                                   -----------    -----------
                                                        28,540         54,821

     Undeveloped oil and gas prospects                 311,007      2,491,238
                                                   -----------    -----------

                                                   $   339,547    $ 2,546,059
                                                   ===========    ===========



     During the year ended August 31, 1998,  the Company  charged to  operations
     $15,000 as an  allocation of its cost basis in a dry hole in which it had a
     carried  working  interest.  This  allocation  was  based on the  Company's
     estimate that this drill location had no future value.  The Company reviews
     and determines the cost basis of drilling  prospects on a drilling location
     basis.

     Depreciation  expense  for the years  ended  August 31, 1997 and August 31,
     1998 was $941 and $22,321, respectively.


                                     F - 12
<PAGE>

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



NOTE 4 - CAPITAL LEASE OBLIGATION

     Capitalized  lease  obligation  at August 31, 1998  consists of a lease for
     office equipment,  repayable in monthly  installments of $150 with interest
     at 10.5%.

     Maturity of this obligation is as follows:

     Year ending August 31,
     1999                                    $1,441
     2000                                     1,616
     2001                                     1,045

     Future minimum payments on capitalized leases are as follows:

     Year ending August 31,
     1999                                                    $1,803
     2000                                                     1,803
     2001                                                     1,062
                                                             ------
                                                              4,668
     Less amount representing interest                          566
                                                             ------

     Present value of net minimum lease payments              4,102

     Less current maturity                                    1,441
                                                             ------

     Long-term portion                                       $2,661
                                                             ======


NOTE 5 - 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 member
     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 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:

     *    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.

                                     F - 13
<PAGE>

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



NOTE 5 - COMMON STOCK (CONTINUED)

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

     *    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.

NOTE 6 - STOCK OPTION PLAN

     In August 1997, the Board of Directors  approved the 1997 Stock Option Plan
     (the "1997 Plan"). Pursuant to the 1997 Plan, the Company may grant options
     to purchase 1,000,000 shares of the Company's common stock to key employees
     and  other  persons  who have or are  contributing  to the  success  of the
     Company.  The  options  granted  pursuant  to the 1997  Plan may be  either
     incentive options qualifying for beneficial tax treatment for the recipient
     or non-qualified  options. The 1997 Plan will be administered by the Option
     Committee,  which  may  consist  of  either  (i)  the  Company's  Board  of
     Directors, or (ii) a Committee, appointed by the Board of Directors, of two
     or more non-employee  directors. No option may be exercisable more than ten
     years after the granting of the option, and no options may be granted under
     the 1997 Plan after  August  13,  2007.  The  exercise  price of  incentive
     options  granted  can  not be  less  than  the  fair  market  value  of the
     underlying common stock on the date the options are granted.

     The status of outstanding  options granted pursuant to the 1997 Plan was as
     follows:

                                              Number     Weighted      Weighted
                                                of        Average       Average
                                              Shares  Exercise Price  Fair Value
                                              ------  --------------  ----------

     Options Outstanding - Inception             --         --             --
     Granted                                  171,000     $1.50            --
                                              -------

     Options Outstanding - August 31, 1997    171,000     $1.50            --
      (None exercisable)
     Expired                                  (60,000)
     Granted                                  135,000     $1.40          $ .31
                                              -------

     Options Outstanding - August 31, 1998    246,000     $1.46          $ .26
      (37,000 exercisable)                    =======





                                     F - 14
<PAGE>


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



NOTE 6 - STOCK OPTION PLAN (CONTINUED)

     The Company has adopted the disclosure-only provisions of SFAS No. 123. Had
     compensation cost for the Company's stock option plan been determined based
     on the fair value at the grant date  consistent with the provisions of SFAS
     No. 123, the Company's net loss and loss per share for 1998 would have been
     increased to the pro forma amounts indicated below:

     Net (loss) applicable to common stockholders - as reported    $  (110,807)
                                                                   ===========
     Net (loss) applicable to common stockholders - pro forma      $  (124,555)
                                                                   ===========
     (Loss) per share - as reported                                $      (.01)
                                                                   ===========
     (Loss) per share - pro forma                                  $      (.01)
                                                                   ===========
     Weighted average fair value of options granted in 1998        $       .31
                                                                   ===========


     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions used for grants:  dividend yield of 0%; expected  volatility of
     25% to 75%; discount rate of 5.50%; and expected lives of 3 to 5 years.

     At August 31,  1998 the  number of  options  exercisable  was  37,000,  the
     weighted  average  exercise price of these options was $1.50,  the weighted
     average  contractual life of the options was 5 years and the exercise price
     was $1.50 per share.

NOTE 7 - 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:

         Years ending August 31,

         1999                                           $39,768
         2000                                            39,768
         2001                                            39,768


     Rent  expense was $0,  $8,694 and $35,539 for the period from  inception to
     December 31,  1996,  for the eight months ended August 31, 1997 and for the
     year ended August 31, 1998, respectively.

     The Company has acquired  leases  covering  2,080 acres in Wyoming from the
     Bureau of Land  Management  ("BLM").  In order to  maintain  its  rights to
     explore these properties, the Company is obligated to pay the BLM a maximum
     aggregate $3,120 annually for the undeveloped acres under lease. The amount
     due has been paid for the lease  period  October 1, 1998 to  September  30,
     1999.

     The Company  entered  into an  agreement  with  Chevron  U.S.A.  Production
     Company  ("Chevron")  for the  Company  to  farm-in  oil and gas  prospects
     located in the San Joaquin basin of  California.  The Company paid $275,000
     upon  execution of the agreement  for certain  rights  including  access to
     certain  proprietary  2D and 3D seismic data.  The  agreement  provides for
     exclusive  rights  to  undertake  oil  and  gas  drilling  and  development
     operations on lands owned in fee by Chevron. As part of the agreement,  the


                                     F - 15
<PAGE>

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



NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

     Company has an option to undertake the acquisition of additional 3D seismic
     data and has  agreed  to drill a test  well on a  portion  of the  prospect
     areas.  In addition,  as part of the  agreement,  the Company has agreed to
     drill an additional test well on another portion of the prospect areas.

     The  Company  may be subject to various  possible  contingencies  which are
     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 8 - RELATED PARTY TRANSACTIONS

     In 1996 and 1997 the  President of the Company  performed  services for PYR
     LLC valued at $12,000  and  $24,000,  respectively.  The value  ascribed to
     these  services was charged to members'  equity  during each of the periods
     ended December 31, 1996 and August 6, 1997 as a capital contribution.

     In 1997 the Company paid an  aggregate  $14,000 in  consulting  fees to its
     President and an entity owned by an officer of the Company; and borrowed an
     aggregate $8,000 from two officers of the Company.  The amount borrowed was
     repaid with interest, at 8%, of $280 by August 31, 1997.

     In 1998 the Company paid $43,530 for services provided to the Company by an
     entity controlled by a former director of the Company.

NOTE 9 - FINANCIAL INSTRUMENTS

     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.

     CONCENTRATION OF CREDIT RISK

     Financial   instruments   which   potentially   subject   the   Company  to
     concentrations  of credit risk consist of cash. The Company  maintains cash
     accounts at one financial institution.  At August 31, 1998, cash on deposit
     at  this  financial  institution  exceeded  federally  insured  amounts  by
     approximately  $270,000.  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.


NOTE 10 - SUBSEQUENT EVENTS

     (a)  In October 1998 the Company  completed  the sale of  $2,300,000,  of a
          maximum $2,500,000, 10% convertible notes, due October 1999. The notes
          are  convertible  into an aggregate  23,000 shares of a newly designed
          Series A  Preferred  Stock of the  Company.  The  Company  must obtain
          

                                     F - 16
<PAGE>

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



NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)

          shareholder  approval  for  authorization  of the  Series A  Preferred
          Stock.  If  authorization  is not  obtained  by April  1999,  the note
          holders may demand  payment of principal  and interest of the note, or
          elect to convert the principal balance of the notes into shares of the
          Company's  common stock, at the rate of $.30 per share. In conjunction
          with the sale of $1,500,000 of the notes,  the Company agreed to pay a
          finders fee  consisting  of $45,000 and  warrants to purchase  175,000
          shares of the Company's  common stock at an exercise price of $.75 per
          share for a period of five years.

     (b)  In October 1998 the Company  issued an aggregate of 266,666  shares of
          its common stock for assignment to the Company of certain  undeveloped
          oil and gas  prospects in  California,  including  oil and gas leases,
          seismic data and intellectual property.

     (c)  On November 23, 1998,  the  Company's  test well being  drilled on its
          East Lost Hills prospect suffered a blowout.  The operator of the well
          is attempting to get the blowout  under  control.  If and when this is
          achieved,  the  Company  and the other  working  interest  owners will
          evaluate the situation and  determine the manner for  proceeding.  The
          financial  accounting  impact  of  this  blowout,  and  any  potential
          environmental  implications,   will  be  reflected,  pursuant  to  the
          Company's  accounting policies for oil and gas properties,  during the
          fiscal year ended August 31, 1999.







                                     F - 17