U.S.
Securities And Exchange CommissionWashington,
D.C. 20549

FORM
10-QSB

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

| | For
the quarterly period ended November 30, 2005
| | ------------------------------------------------

OR

|[    ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|------ |  | ----------------------------------------------------------------------------------

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

Commission
File No. 001-15511

PYR
ENERGY CORPORATION(Exact name of small business issuer as specified in its charter)

|                                                               | 
|-------------------------------------------------------------- | 
|                                                               | 
|Maryland                                                       | 
|(State or other jurisdiction of incorporation or organization) | 
|1675 Broadway, Suite 2450, Denver, CO                          | 
|(Address of principal executive offices)                       | 

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

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

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act).Yes [   ]  No [ X ]

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

There
were 37,915,259 shares of $.001 par value common stock outstanding on November
30, 2005.

---

PART I.     FINANCIAL INFORMATION

|                                                                      | 
|--------------------------------------------------------------------- | 
|Item 1.     Financial Statements                                      | 
|Balance Sheets - November 30, 2005 (Unaudited) and August 31, 2005    | 
|Statements of Operations - Three Months Ended November 30, 2005       | 
|and November 30, 2004 (Unaudited)                                     | 
|                                                                      | 
|Statements of Cash Flows - Three Months Ended November 30, 2005       | 
|and November 30, 2004 (Unaudited)                                     | 
|Notes to Financial Statements                                         | 
|                                                                      | 
|Item 2.     Management's Discussion and Analysis or Plan of Operation | 
|Item 3.     Controls and Procedures                                   | 

PART II.     OTHER INFORMATION

|                                                                         | 
|------------------------------------------------------------------------ | 
|Item 1.     Legal Proceedings                                            | 
|                                                                         | 
|Item 2.     Unregistered Sales o f Equity Securities and Use of Proceeds | 
|Item 3.     Defaults Upon Senior Securities                              | 
|Item 4.     Submission of Matters to a Vote of Security Holders          | 
|Item 5.     Other Information                                            | 
|Item 6.     Exhibits                                                     | 
|Signatures                                                               | 

2

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ITEM 1. FINANCIAL STATEMENTS

|                                                               | November 30,2005 | August 31,2005
|-------------------------------------------------------------- | ---------------- | --------------
|
|ASSETS                                                         |                  |               
|CURRENT ASSETS                                                 |                 
|Cash                                                           |                  | $ 10,084      
|Oil and gas receivables                                        |                  | 1,215         
|                                                               |                  |               
|Other receivable                                               |                  | 58            
|Prepaid expenses and other assets                              |                  | 22            
|                                                               |                  |               
|Total current assets                                           |                  | 11,379        
|                                                               |                  |               
|PROPERTY AND EQUIPMENT, at cost                                |                 
|Oil and gas properties under full cost, net                    |                  | 14,765        
|Furniture and equipment, net                                   |                  | 48            
|                                                               |                  |               
|                                                               |                  | 14,813        
|                                                               |                  |               
|OTHER ASSETS                                                   |                 
|Deferred financing costs and other assets                      |                  | 31            
|                                                               |                  |               
|TOTAL ASSETS                                                   |                  | $ 26,223      
|                                                               |                  |               
|LIABILITIES AND STOCKHOLDERS' EQUITY                           |                 
|CURRENT LIABILITIES                                            |                 
|Accounts payable                                               |                  | $      114    
|                                                               |                  |               
|Accrued net profits interest payable                           |                  | 671           
|Other accrued liabilities                                      |                  | 478           
|Asset retirement obligation                                    |                  | 904           
|                                                               |                  |               
|Total current liabilities                                      |                  | 2,167         
|                                                               |                  |               
|LONG TERM LIABILITIES                                          |                 
|Convertible notes                                              |                  | 7,133         
|Asset retirement obligation                                    |                  | 300           
|COMMITMENTS AND CONTINGENCIES                                  |                 
|STOCKHOLDERS' EQUITY                                           |                 
|Preferred stock, $.001 par value; authorized 1,000,000 shares; |                 
|                                                               |                  |               
|issued and outstanding - none                                  |                  | --            
|Common stock, $.001 par value; authorized 75,000,000 shares;   |                 
|issued and outstanding -  37,915,259 at 11/30/05 and           |                 
|31,640,259 shares at 8/31/05                                   |                  | 38            
|Capital in excess of par value                                 |                  | 51,278        
|Accumulated deficit                                            |                  | (34,693       
|                                                               |                  |               
|Total stockholders' equity                                     |                  | 16,623        
|                                                               |                  |               
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     |                  | $ 26,223      
|                                                               |                  |               

See notes to consolidated financial statements.

3

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PYR
ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                                                    | Three Months EndedNovember 30, |                  
|--------------------------------------------------- | ------------------------------ | -----------------
|
|
|REVENUES                                            |                                |                  
|Oil and gas revenues                                |                                | $          2,003 
|                                                    |                                |                  
|OPERATING EXPENSES                                  |                               
|                                                    |                                |                  
|Lease operating expenses                            |                                | 244              
|                                                    |                                |                  
|Production taxes, gathering and transportation      |                                | 124              
|                                                    |                                |                  
|Net profits interest expense                        |                                | 259              
|Depletion, depreciation, amortization and accretion |                                | 357              
|General and administrative                          |                                | 504              
|                                                    |                                |                  
|Total operating expenses                            |                                | 1,488            
|                                                    |                                |                  
|INCOME FROM OPERATIONS                              |                                | 515              
|OTHER INCOME (EXPENSE)                              |                               
|Interest income                                     |                                | 47               
|Other income                                        |                                | --               
|Interest (expense)                                  |                                | (99              
|Other (expense)                                     |                                | (7               
|                                                    |                                |                  
|Total other income (expense)                        |                                | (59              
|                                                    |                                |                  
|NET INCOME                                          |                                | $             456
|                                                    |                                |                  
|NET INCOME PER COMMON                               |                               
|SHARE - BASIC AND DILUTED                           |                                | $            0.01
|                                                    |                                |                  
|WEIGHTED AVERAGE NUMBER OF                          |                               
|COMMON SHARES OUTSTANDING-                          |                               
|BASIC                                               |                                | 35,417,567       
|DILUTED                                             |                                | 36,010,317       

See notes to
consolidated financial statements.

4

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PYR
ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                       | Three Months EndedNovember 30, |           
|------------------------------------------------------ | ------------------------------ | ----------
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES                   |                                |           
|Net income                                             |                                | $      456
|Adjustments to reconcile net income to                 |                               
|net cash provided by operating activities              |                               
|Depletion, depreciation and amortization               |                                | 351       
|Amortization of financing costs                        |                                | 1         
|Interest expense converted into debt                   |                                | 175       
|Stock option expense for non-qualifying options issued |                                | 5         
|Accretion of asset retirement obligation               |                                | 6         
|Changes in assets and liabilities                      |                               
|                                                       |                                |           
|Decrease (increase) in accounts receivable             |                                | 403       
|Decrease in prepaids and other receivables             |                                | 103       
|(Decrease) increase in accounts payable                |                                | (73       
|                                                       |                                |           
|(Decrease) increase in net profits interest liability  |                                | (616      
|Increase in accrued expenses                           |                                | 100       
|                                                       |                                |           
|Net cash provided by operating activities              |                                | 911       
|                                                       |                                |           
|CASH FLOWS FROM INVESTING ACTIVITIES                   |                               
|                                                       |                                |           
|Additions of furniture and equipment                   |                                | (21       
|Additions to oil and gas properties                    |                                | (1,773    
|                                                       |                                |           
|Proceeds from exercise of exploration options          |                                | --        
|                                                       |                                |           
|Proceeds from sale of  properties                      |                                | --        
|                                                       |                                |           
|Net cash used in investing activities                  |                                | (1,794    
|                                                       |                                |           
|CASH FLOWS FROM FINANCING ACTIVITIES                   |                               
|Proceeds from sale of common stock                     |                                | 8,164     
|Offering costs                                         |                                | (161      
|Other                                                  |                                | 30        
|                                                       |                                |           
|Net cash provided by financing activities              |                                | 8,033     
|                                                       |                                |           
|NET INCREASE (DECREASE) IN CASH                        |                                | 7,150     
|CASH, BEGINNING OF PERIODS                             |                                | 2,934     
|                                                       |                                |           
|CASH, END OF PERIODS                                   |                                | $ 10,084  
|                                                       |                                |           
|                                                       |                                |           

See notes to
consolidated financial statements.

5

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PYR
ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(continued)

|                                                                  | Three Months EndedNovember 30, |             
|----------------------------------------------------------------- | ------------------------------ | ------------
|
|
|SUPPLEMENTAL CASH FLOW INFORMATION:                               |                               
|                                                                  |                                |             
|Cash paid for interest and income taxes                           |                                | $          -
|Non-cash financing activities:                                    |                               
|                                                                  |                                |             
|Net increase in payables for capital expenditures                 |                                | 99          
|Debt issued for interest                                          |                                | 175         
|                                                                  |                                |             
|Third party exercise of right to drill option (collected in 2005) |                                | --          
|                                                                  |                                |             
|Asset retirement obligation increase                              |                                | --          
|                                                                  |                                |             

See notes to consolidated financial statements.

6

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PYR
ENERGY CORPORATIONNotes to Consolidated Financial StatementsNovember 30, 2005(Unaudited)

The
accompanying interim financial statements of PYR Energy Corporation are
unaudited. In the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the interim period. The results of
operations for the three months ended November 30, 2005 are not necessarily
indicative of the operating results for the entire year.

We
have prepared the financial statements included herein pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. We believe the disclosures made
are adequate to make the information not misleading and recommend that these
condensed financial statements be read in conjunction with the audited financial
statements and notes included in our Form 10-KSB for the year ended August 31,
2005.

1.     SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:

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

| | The
Companys financial statements are based on a number of significant  estimates,
including reliability of receivables, selection of the useful lives  for property and
equipment, timing and costs associated with its retirement  obligations and oil and gas
reserve quantities which are the basis for the  calculation of depreciation, depletion
and impairment of oil and gas properties.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Earnings
(Loss) Per Share  Basic earnings (loss) per common share is
computed by dividing net earnings (loss) attributed to common stock by the  weighted
average number of common shares outstanding during each period. Diluted  earnings (loss)
per share is computed by adjusting the average number of common  shares outstanding for
the dilutive effect, if any, of convertible equity  instruments, such as convertible
notes payable, stock options and warrants. The  dilutive effect of such securities was
insignificant for the three months ended  November 30, 2005 and 2004, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Share
Based Compensation  In October 1995, the Financial  Accounting
Standards Board issued Statement of Financial Accounting Standards  No. 123, Accounting
for Stock-Based Compensation (SFAS 123), effective  for fiscal years beginning after
December 15, 1995. This statement defines a  fair value method of accounting for employee
stock options and encourages  entities to adopt that method of accounting for its stock
compensation plans.  SFAS 123 allows an entity to continue to measure compensation costs
for these  plans using the intrinsic value based method of accounting as prescribed in
Accounting Pronouncement Bulletin Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25). The Company has elected to continue to account for its  employee
stock compensation plans as prescribed under APB 25. Had compensation  cost for the
Companys stock-based compensation plans been determined based  on the fair value at
the grant dates for awards under those plans consistent  with the method prescribed in
SFAS 123, the Companys net income and income  per share for the quarters ended
November 30, 2005 and 2004 would have been  decreased to the pro forma amounts indicated
below:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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|                                       | November 30,2005 | November 30,2004
|-------------------------------------- | ---------------- | ----------------
|Net income:                            |                  |                 
|As reported                            |                  | $  456          
|Pro forma equity compensation expense  |                  | (231            
|                                       |                  |                 
|Pro forma net income (loss)            |                  | $  225          
|                                       |                  |                 
|Pro forma net income (loss) per share: |                 
|As reported                            |                  | $ 0.01          
|                                       |                  |                 
|Pro forma                              |                  | $ 0.01          
|                                       |                  |                 

| | Reclassification  Certain
reclassifications have been made to the November 30, 2004  financial statements to
conform to November 30, 2005 presentation. Such  reclassifications had no effect on net
income.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recent
Accounting Pronouncements  In December 2004, the Financial
Accounting Standards Board issued its final standard on accounting for employee  stock
options, SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS 123  (R)). SFAS
123 (R) replaces SFAS No. 123, Accounting for Stock-Based  Compensation (SFAS
123), and supersedes APB 25, Accounting for Stock  Issued to Employees.
SFAS 123 (R) requires companies to measure  compensation costs for all share-based
payments, including grants of employee  stock options, based on the fair value of the
awards on the grant date and to  recognize such expense over the period during which an
employee is required to  provide services in exchange for the award. The pro forma
disclosures previously  permitted under SFAS 123 will no longer be an alternative to
financial statement  recognition. For entities that file as a small business issuer, such
as PYR  Energy Corporation, SFAS 123 (R) is effective for all awards granted, modified,
repurchased or cancelled after, and to unvested portions of previously issued  and
outstanding awards vesting for annual periods beginning after December 15,  2005, which
for us will be the first quarter of fiscal 2007. We are currently  evaluating the effect
of adopting SFAS 123 (R) on our financial position and  results of operations. We
currently estimate the adoption of SFAS 123 (R) will  result in expenses in amounts that
are similar to the current pro forma  disclosures under SFAS 123.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.     
STOCKHOLDERS EQUITY

| | In
mid-October 2005, the Company completed a private placement consisting of  6,327,250
shares of common stock at a price of $1.30 per share to a group of  accredited
institutional and individual investors. The Company received  approximately $8.0 million
in net proceeds after deducting related offering  expenses. In addition, the Company
issued warrants to purchase 52,500 shares of common stock in partial payment of a commission for
financial advisory services performed in  connection with the private placement. The
warrants have an exercise price of  $1.30 and expire in five years. The proceeds received
from the private placement  will be used for general corporate purposes and costs
associated with the  Companys development drilling portfolio.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2005, the Company filed a registration statement that would allow the  re-sale
by shareholders of the shares issued pursuant to this private placement.  This statement
became effective in January 2006.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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3.     
CONTINGENCIES

On
July 29, 2005, the Company filed a lawsuit in the U.S. District Court for the
Eastern District of Texas, Beaumont Division against Samson Lone Star Limited
Partnership (Samson) and Samsons parent company, Samson
Resources Corp. The Company alleged in its complaint that Samson, the operator
of a producing gas well in Jefferson County, Texas named the Sun Fee No. 1
Sidetrack Well (the Sun Fee Well), has breached its obligations to
the Company, which owns interests in the property on which the Sun Fee Well is
located, by joining, without authorization, the Sun Fee Well into a unit with
other properties in which the Company has no interest, many of which are
non-productive. Samson has a large interest in the properties that Samson has
joined into the unit. Pursuant to Samsons proposed pooling configuration,
the Companys working and overriding royalty interests in the Sun Fee Well
would be reduced substantially. The Company believes that Samson has no legal or
contractual right to reduce the Companys interests in this manner. The
Company is seeking monetary damages for all payments due and owing to the
Company based on the proper, undiluted interests in the property. On September
13, 2005, the Court entered a Preliminary Injunction ordering Samson to return
the Company to pay status for the undisputed amounts upon which Samson had been
paying the Company prior to the filing of the suit. On December 23, 2005, Samson
filed a motion for summary judgment on the Companys claims, to which the
Company filed its response on January 3, 2006, rigorously denying that Samson
has grounds in law or fact for the requested relief. The outcome of the
litigation will determine whether PYR owns a 5.19% working interest and 1.5%
overriding royalty interest, as arises from Samsons unit pooling, or an
8.33% working interest and an overriding royalty interest in excess of 1.5%, in
the Sun Fee well, as PYR believes it is entitled to. Even if we are not
successful in the litigation, the outcome will not result in a negative
adjustment to our revenues or production volumes because we have reported
production and revenue only on the lower working interest and the lower royalty
interest in our financial and operating statements to date. Additionally, this
lower working interest and lower overriding royalty interest are undisputed, and
it is only the difference between the 5.19% and 8.33% working interests and
associated overriding royalty interests that are the subject of the ongoing
litigation.

On
August 22, 2005, Samson filed a lawsuit in District Court for Jefferson County,
Texas, 58th Judicial District against the Company, claiming that
Samson has the right to serve as operator to drill and operate on the property
to the east of the Sun Fee Well, which is located on property in which the
Company owns a majority interest. The Company holds a 100% interest in oil and
gas leases that comprise 75% of the approximately 400-acre parcel on which it is
planning to drill a gas well to the same reservoir from which the Sun Fee Well
produces. In June 2005, the Company notified Samson of its intention to drill a
well on this property and offered Samson the opportunity to participate in the
well. Samson elected to participate in the well and demanded to be allowed to
operate the well. Upon the Companys initial preparation of the drill site,
which began in August 2005, Samson filed a lawsuit seeking a judicial
declaration of Samsons exclusive right to operate the well and injunctive
relief enjoining the Company from continuing its drilling operations or serving
as operator. The Company subsequently completed construction of the drillsite.
The Company intends to drill the well in order to protect its interests in the
underlying leases until such time as the issue is fully adjudicated.

The
Company will continue to vigorously pursue and defend its rights with respect to
the foregoing litigations.

On
January 9, 2006, the Venus Exploration Trust (Trust) dismissed the
adversary proceeding it had filed against the Company on November 2, 2005, in
the on-going bankruptcy proceeding of Venus Exploration Company
(Venus) in the U.S. Bankruptcy Court for the Eastern District of
Texas. In this proceeding, the Trust, representing the interests of the secured
creditors, also demanded a full accounting and, in the future, direct payment of
the net profits interest accounts established under the Net Profits Conveyance
by which the Company purchased Venus assets. Through these accounts, the
Company accounts for net proceeds from income-generating projects, presently,
the Nome and Madison projects in Jefferson County, Texas. The Company
anticipates that final dismissal papers will be signed and filed in the near
future.

4.     
SUBSEQUENT EVENTS

In
December 2005, the Company acquired additional working interests in the Hansford
project, located in Hansford County of the Texas panhandle, from multiple
private entities for $1.7 million. The acquisition includes approximately 1.95
Bcf of proved reserves of which 86% are undeveloped and 2,265 acres of
leasehold. With this acquisition, the Company will own 100% working interest on
a majority of the acreage which includes two producing wells and a well that has
been drilled, cased and is awaiting completion.

In
addition, in December 2005, the Company sold its interest in certain leasehold
acreage located in its School Road prospect in California for approximately
$96,000.

9

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ITEM
2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The
following discussion contains forward-looking statements that reflect our future
plans, estimates, beliefs and expected performance. The forward-looking
statements are dependent upon events, risks and uncertainties that may be
outside our control. Our actual results could differ materially from those
discussed in these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, market prices
for natural gas and oil, economic and competitive conditions, regulatory
changes, estimates of proved reserves, potential failure to achieve production
from development projects, capital expenditures and other uncertainties, as well
as those factors discussed below and in our Annual Report on Form 10-KSB for the
year ended August 31, 2005. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed may not occur.

The
following discussion should be read in conjunction with the Financial Statements
and Notes thereto referred to in Item 1. Financial Statements of
this Form 10-QSB.

Overview

PYR
Energy Corporation (referred to as PYR, the Company,
we, us and our) is an independent oil and
gas exploration and production company, engaged in the exploration, development
and acquisition of crude oil and natural gas reserves. Our current focus is on
the Rocky Mountain, Texas and Gulf Coast regions.

Liquidity
and Capital Resources

Our
primary sources of liquidity historically have been from sale of our common
stock, issuance of convertible notes, and to a much lesser extent, net cash
provided by operating activities. Our primary use of capital has been for the
acquisition, development, and exploration of oil and natural gas properties. As
we pursue growth, we continually monitor the capital resources available to us
to meet our future financial obligations, planned capital expenditure activities
and liquidity. Our future success in growing proved reserves and production is
highly dependent on capital resources available to us and our success in finding
or acquiring additional reserves. At November 30, 2005, we had $9.2 million in
working capital and cash of approximately $10.1 million.

Cash Flow
from Operating Activities

Net
cash provided by operating activities was $959,000 and $395,000 for the three
months ended November 30, 2005 and 2004, respectively. The increase in net cash
provided by operating activities was substantially due to the increase in
production revenues, net of increases in expenses. See Results of
Operations for discussion of changes in expenses. Non-cash charges
increased principally due to higher depreciation, depletion and amortization
associated with increased production and higher depletion rates. Changes in
current assets and liabilities decreased cash flow from operations by $83,000 in
the first quarter ended November 30, 2005 compared with an increase in cash
flows from operations of $121,000 in the same period in 2004. The decrease in
current assets and liabilities for the current period is principally attributed
to a reduction of net profits liability resulting from net profits payments,
offset, in part, by a decrease in oil and gas receivables attributed principally
to collection of previously suspended revenues.

Operating
cash flows are impacted by many variables, the most significant of which are
production levels and the volatility of prices for natural gas and oil produced.
Prices for these commodities are determined primarily by prevailing market
conditions. Regional and worldwide economic activity, weather and other
substantially variable factors influence production levels and market conditions
for these products. These factors are beyond our control and are difficult to
predict.

Capital
Expenditures

Our
capital expenditures approximated $1.8 million and $1.2 million for the first
quarter ended November 30, 2005 and 2004, respectively. The total for the
current period includes principally $1.4 million for drilling, development,
exploration and exploitation and $422,000 for leasehold acquisition costs.
Drilling costs for the current period were incurred principally on two
development wells located in Texas, the Chisum #1 well and the Lackey Gas Unit
#2 well, and on the exploratory #1-30 Duck Federal well located in Wyoming.

10

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During
the first quarter ended November 30, 2004, we received $750,000 for a
non-refundable option fee received from Suncor Energy Natural Gas America, Inc.
(SENGAI) pursuant to an Exploration Option Agreement between the
Company and SENGAI covering our Rogers Pass exploration project in the foothills
of west-central Montana.

We
currently anticipate our capital budget will be approximately between $7.5 and
$10.0 million for fiscal year 2006 which will be used for a diverse portfolio of
development and exploration wells in our core areas of operation. We may
consider selling down a portion of our interests in some of our exploration and
development projects to industry partners to generate additional funds to
finance our 2006 capital budget. We are projecting that cash on hand, cash
available from operating activities, and funds from the partial sale of our
interest in some prospects will be sufficient to fund our 2006 capital budget.

Financing
Activities

In
mid-October 2005, the Company completed a private placement of 6,327,250 shares
of common stock at a priced of $1.30 per share, to a group of accredited
institutional and individual investors. Net proceeds from this placement of
approximately $8.0 million will be used for general corporate purposes and costs
associated with the Companys development drilling portfolio located
principally in the Rocky Mountains and Texas.

It
is anticipated that the continuation and future development of our business will
require additional, and possibly substantial, capital expenditures. We have no
reliable source for additional funds for administration and operations to the
extent our existing funds have been utilized. In addition, our capital
expenditure budget for the fiscal year ending August 31, 2006 will depend on our
success in selling additional prospects for cash, the level of industry
participation in our exploration projects, the availability of debt or equity
financing, cash on hand and the results of our activities. We anticipate
spending a minimum of approximately between $7.5 and $10.0 million on
exploration and development activities during our fiscal year ending August 31,
2006. To limit capital expenditures, we intend to form industry alliances and
exchange an appropriate portion of our interest for cash and/or a carried
interest in our exploration projects. We may need to raise additional funds to
cover capital expenditures. These funds may come from cash flow, equity or debt
financings, a credit facility, or sales of interests in our properties, although
there is no assurance additional funding will be available or that it will be
available on satisfactory terms.

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

Summary of
Development and Exploration Projects

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

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

Rocky
Mountain Exploration

Mallard Project.The #1-30 Duck Federal Sidetrack well commenced drilling in mid-July 2004
and was temporarily suspended, due to winter drilling restrictions, in December
2004. The wellbore was re-entered in early August 2005, and reached a total
measured depth of 15,110 on October 18, 2005 within the Lodgepole
Formation. Based on analysis of drilling shows, open-hole logs, and reservoir
pressure measurements, the working interest partners decided to attempt a
completion of the well within the objective Mission Canyon Formation. Casing has
been run to total depth, and the well has been perforated over the prospective
zones. The Mission Canyon is the primary producing zone within the nearby
Whitney Canyon-Carter Creek Field, which has produced over 2.1 Tcfe to date. It
is believed that the #1-30 Duck Federal well has encountered the Whitney
Canyon-Carter Creek accumulation, and likely represents a development step out
well. The #1-30 Duck Federal well has been completed and is currently awaiting
final hook-up to processing and sales. Based on logging results and reservoir
pressure tests indicating approximately 3800 psi, 177 net feet of reservoir were
perforated and stimulated, within eleven separate zones covering a 333 foot
gross interval, in the well. Due to the high H2S content (17 to 20%), a limited
clean-up flow back was accomplished and indicated flow rates of
approximately 10 MMcf per day with associated liquid production. The Company
believes that additional, un-perforated, pay exists in the wellbore. While
previously anticipated that the well would be brought on-line to sales by
mid-January, final start up of production has been delayed due to ongoing third
party construction and modification at the gas processing plant. The operator
has indicated that it is currently anticipated that production and sales will
commence by late February contingent on no additional construction delays. The
Company owns a 28.75% working interest in the well and surrounding acreage. It
is anticipated that PYR and the working interest partners will acquire
approximately 20 square miles of 3-D seismic data during the summer of 2006 in
order to better delineate additional drilling opportunities in the area. PYR is
participating in the project with a 28.75% working interest.

11

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Ryckman
Creek Project. We have leased approximately 1,820 net acres, covering
the majority of the abandoned Ryckman Creek field, in the Overthrust region of
southwestern Wyoming. Ryckman Creek, located 6 miles east of our Mallard
prospect, was discovered in 1975 and produced approximately 250 Bcfe prior to
abandonment. We believe that significant remaining recoverable gas reserves were
stranded in Ryckman Creek upon abandonment. We are currently analyzing
production and geologic data to determine potential reserves in multiple zones,
including the Twin Creek, Nugget, and Thaynes Formations, in the field. Due to
rig availability timing, it is anticipated that additional development activity
of the Ryckman Creek project will not occur until sometime in 2006.

Montana
Foothills Project.Following the plugging and abandonment of the
Flesher Pass exploratory well in August 2005, the project operator has informed
the Company that they do not intend to exercise their option to drill an
additional earning well on the acreage block. The Company is re-evaluating
exploration prospects associated with its undeveloped acreage in the project and
subsequent to August 31, 2005, has elected to release some of its 241,800 acres
of undeveloped acreage.

Texas and
Gulf Coast Exploration

Nome
Field was discovered in 1994, and our interpretation of
subsequently acquired 3D seismic over the field indicates the presence of
numerous undeveloped fault blocks. Multiple structural closures and associated
bright spot locations have been identified at Nome based on the 3D seismic.
Production in the Sun Fee GU #1-ST well (the Sun Fee Well), from the
upper Yegua, was initiated in late May 2004, and beginning in early June 2005,
averaged approximately 19MMcfe per day. Cumulative production since inception is
in excess of 8.089 Bcfe through end of December, 2005. When the well reached
payout on October 13, 2004, PYR was placed in pay status as a working interest
participant in the well. Based on pooling of lands into the Sun Fee Gas Unit by
the operator, our current working interest in the well and associated lands is
5.19% with a 1.5% overriding royalty interest. We and our partners control
approximately 4,200 acres of gross leasehold acres in the project. We intend to
drill a well (Tindall #1), offsetting by approximately 1600 feet the Sun Fee GU
#1-ST, in 2006 subject to drilling rig availability. We calculate our working
interest in the Tindall #1 well to be 77.08%, although we anticipate that other
parties may dispute this amount. Samson Lone Star L.P. (Samson)
filed a lawsuit seeking a judicial declaration of Samsons exclusive right
to operate the Tindall well and injunctive relief enjoining the Company from
continuing its drilling operations or serving as operator.

We
are currently in litigation with the operator of the Sun Fee Well, Samson Lone
Star L.P. (Samson), concerning, among other matters, Samsons
pooling of certain lands into the production unit and corresponding reduction in
PYRs working interest. The outcome of the litigation will determine
whether PYR owns a 5.19% working interest and 1.5% overriding royalty interest,
as arises from Samsons unit pooling, or an 8.33% working interest and an
overriding royalty interest in excess of 1.5%, in the Sun Fee well, as PYR
believes it is entitled to. Even if we are not successful in the litigation, the
outcome will not result in a negative adjustment to our revenues or production
volumes because we have reported production and revenue only on the lower
working interest and the lower royalty interest in our financial and operating
statements to date. Additionally, this lower working interest and lower
overriding royalty interest are undisputed, and it is only the difference
between the 5.19% and 8.33% working interests and associated overriding royalty
interests that are the subject of the ongoing litigation.

Both
our revenues and costs associated with the production from the Sun Fee Well, as
well as our costs incurred on the Nome Project, are subject to the net profits
interest agreement we hold with Venus Exploration Trust (Trust). The
net profits interest agreement arose out of our acquisition of properties from
Venus Exploration Inc. (Venus) in May 2004. The net profit interest
under the agreement varies from 25% to 50% with respect to different Venus
exploration and exploitation project areas, and decreases by one-half of its
original amount after a total of $3.3 million in net profits proceeds has been
paid to the Trust. The amount of net profits interest liability recognized over
time is subject to fluctuation, because both revenues and costs associated with
production from any wells and other costs incurred on the designated exploration
and exploitation project areas will increase or decrease over a given period of
time.

12

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Madison
prospect, located in the northern part of the Constitution Field,
Jefferson County, Texas, is an exploitation project to test multiple sand
intervals within the expanded Yegua section, downthrown to a major growth fault.
The Maness GU #1 well started production in mid-August 2004, and from inception
through December 2005 the well has cumulative production of approximately 2.085
Bcfe. The well is currently producing at a rate of approximately 4 MMcfe per
day. The operator has converted an existing well bore within the project area
into a water disposal well, and is planning to drill an offset development well
(Wall#1) in the spring of 2006, depending on rig availability. We will
participate for 17.5% working interest in the drilling of this development well
based on our additional purchase of 5% working interest from the operator. The
purchase calls for the Company to fund 6.66% of the drilling costs to casing
point to earn the additional 5% working interest in the Wall #1 well and
surrounding acreage. Wells drilled in this prospect are subject to a 50% net
profits interest agreement with the Venus Exploration Trust.

Tortuga Grande prospect, located in Smith County,
Texas, is a project to test the productivity of the Cotton Valley Sand section.
The Chisum #1 well, operated by Carrizo Oil and Gas Inc, is projected to a
target depth of approximately 15,500 feet, and is designed to test a potentially
thicker section of Cotton Valley Sand in a more favorable structural position to
the Brady #1 well. As a result of certain parties in the well electing not to
participate in the drilling of the well, PYR exercised its rights to increase
its working interest in the well to 28.57% working interest. The Chisum #1 well
reached total drilling depth of approximately 15,850 feet. Log and core analysis
of the Cotton Valley section revealed abundant sand thickness in the expanded
turtle section, but did not indicate commercial reservoir
properties. As a result, the operator recommended abandonment of the Cotton
Valley section and completion of multiple horizons in the Travis Peak and
Rodessa formations. Multiple zones within the Travis Peak have been perforated
and stimulated, yielding a modest amount of oil recovery. Flow testing of the
Travis Peak has been initiated, and once completed, it is anticipated that the
Rodessa will be completed and tested. Rodessa production, within 3 miles to the
north and northeast of the Chisum location, has yielded cumulative production
ranging up to 6.4 Bcfe per well. The Company is participating in the completion
of the Travis Peak and Rodessa with its 28.57% working interest. PYR and its
partners control approximately 9,800 acres of leasehold in the project. Pending
favorable results from the Chisum #1 completion, the Company anticipates
drilling additional wells to fully exploit the Travis Peak and Rodessa potential
in the project area. Wells drilled in this prospect are subject to a net profits
interest agreement with the Venus Exploration Trust.

Cotton
Creek prospect, located in Jefferson County, Texas, is adjacent
to the Nome project. The prospect is located approximately one mile west of the
productive Sun Fee #1 well in the same structural fault block. PYR owns a 50%
working interest in the project and controls with its partner approximately 500
acres of leasehold. It is anticipated that an initial test well will be drilled
in 2006. PYR will retain approximately 25% working interest in the well and
intends to farmout the remainder of its interest to an industry partner.

Merganser
prospect, located in Leon County, Texas, targets Cotton Valley
and Bossier sandstone reservoirs in an undrilled structural feature defined by
3D seismic data. The prospect occupies a fault-bounded salt-withdrawal trough
resulting in potential significant thickening of the Bossier and Cotton Valley
sand sections. The prospect location is structurally and stratigraphically
downdip from Cotton Valley production as well as updip from recent Bossier
productive discoveries. Due to competition and skyrocketing lease costs in the
project area, PYR has decided to discontinue active leasing in the project, and
has signed an agreement to sell its interest in approximately 250 acres, in the
prospect, for $1,000 per acre.

Bayou
Duralde Project, located in Evangeline Parish, LA, is an
exploration program to identify and drill potential gas reservoirs in
Yegua/Cockfield channel complexes. PYR owns a 25% working interest in the
project and controls, along with its partner, in excess of 3,000 net acres of
leasehold.  PYR will participate with a 15% cost bearing interest and has
farmed out the remainder of its working interest. It is anticipated that the
initial test well at Bayou Duralde will begin drilling operations in the first
six months of 2006 depending on rig availability.

At
the Wilburton Field in Latimer County, Oklahoma, the
Scharff #4-1 well was recently drilled and completed in the Lower Atoka (Cecil)
formation, which resulted in initial production rates of up to 38 MMcf per day
and is currently producing at an average rate of approximately 19 MMcfe per day.
The Scharff #5-1 well, an offset of the Scharff #4-1, commenced drilling
activity on September 13, 2005, and reached total drilling depth in early
November 2005. The Scharff #5-1 is currently undergoing final completion
activities, and should be placed on sales in early 2006. It is anticipated that
the well will initially produce at rates exceeding 20 MMcf per day based on flow
testing to date. The Scharff #6-1 well was spud on November 30, 2005 and is
currently drilling ahead below 14,000 feet. The Company has a 2.42 % working
interest in these wells.

13

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Hansford
Project,located in Hansford County of the Texas panhandle, is a
development project at the southern end of the Houghton Embayment. Main
producing horizons within the Hansford area include the upper and lower Morrow
as well as the Chester. Purchased originally as part of the Venus Exploration
acquisition, the Company purchased additional working interest in two wells and
associated undeveloped acreage in January and February 2005 for approximately
$400,000. On December 20, 2005, the Company closed a strategic acquisition of
additional interest in the Hansford project, from multiple private entities, for
$1.7 million in cash. The acquisition of the Hansford County property allows the
Company to consolidate working interest and operations in a field which offers
significant development drilling opportunities. The transaction, which has an
effective date of December 1, 2005, includes externally estimated Total
Proved reserves of approximately 1.950 Bcf, of which 86% of the reserves
are classified as Proved Undeveloped. PYR will own 100% working
interest on the majority of the acreage, which includes two producing wells in
addition to the recently drilled Lackey GU #2 well which commenced drilling on
October 23, 2005, has been cased, and is currently awaiting completion. The
Company plans to complete the Lackey GU #2 and drill two additional PUD
locations in the spring of 2006.

Other

SAN JOAQUIN
BASIN, CALIFORNIA

Blizzard
Prospect. This project is a 3D seismic derived exploration and
exploitation program offsetting the Rio Viejo field at the south end of the San
Joaquin Basin. A linear sand body, stratigraphically higher than any of the
productive Rio Viejo sands, has been identified, north of the field, on the
seismic data and represents an exploration opportunity for new reserves.
Additionally, analysis of the seismic data over the field suggests that up to
two additional undrilled field exploitation locations may exist. PYR owns 100%
of the prospect.

Bulldog
Prospect. This project is a 2D seismically identified natural gas
and condensate prospect located adjacent to the giant Kettleman North Dome field
in the San Joaquin Basin. This prospect can be best characterized as a classic
footwall fault trap, similar to the many known footwall fault trap accumulations
that have produced significant quantities of hydrocarbons throughout the San
Joaquin basin. We intend to sell down our working interest in this project and
retain a 25% to 50% working interest in the prospect acreage.

Wedge
Prospect. This is a seismically identified Temblor prospect
located northwest of and adjacent to the East Lost Hills deep gas discovery.
During the first fiscal quarter of 2001, we acquired approximately 17 miles of
proprietary, high effort 2D seismic data and combined this data with existing 2D
seismic data in order to refine what we interpret as the up-dip extension of the
East Lost Hills structure. Our seismic interpretation shows that the same trend
at East Lost Hills extends approximately ten miles farther northwest of the East
Lost Hills Area of Mutual Interest and can be encountered as much as 3,000 feet
higher. Our approach is to sell down our working interest to industry partners,
and retain a 25% to 50% working interest in this prospect.

CANADA

The
Companys Canadian oil and gas property investment is comprised principally
of non-producing acreage. During fiscal year 2005, the Company impaired its
initial investment of $580,000 in the Canadian properties and decided to limit
future expenditures in Canada.

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Results of
Operations

Three Months
Ended November 30, 2005 Compared to Three Months Ended November 30, 2004

|                                                       | Three Months Ended |              |  |             
|------------------------------------------------------ | ------------------ | ------------ |  | ------------
|
|
|
|Operating Results:                                     |                    |              |  |             
|Revenues                                               |                   
|Oil and gas production revenues                        |                    | $    2,003   |  | $    1,083  
|Interest income                                        |                    | 47           |  | 20          
|Operating Expenses                                     |                   
|Lease operating expense                                |                    | 244          |  | 209         
|Production taxes, gathering and transportation expense |                    | 124          |  | 73          
|Net profits expense                                    |                    | 259          |  | 122         
|Depletion, depreciation, amortization and accretion    |                    | 357          |  | 44          
|General and administrative                             |                    | 504          |  | 511         
|                                                       |                    |              |  |             
|Total operating expenses                               |                    | $    1,488   |  | $       959 
|Interest Expense                                       |                    | $         99 |  | $         83
|Production Data:                                       |                   
|Natural gas (Mcf)                                      |                    | 130,244      |  | 63,057      
|Oil (Bbls)                                             |                    | 12,602       |  | 13,978      
|Combined volumes (Mcfe)                                |                    | 205,856      |  | 146,925     
|Daily combined volumes (Mcfe/d)                        |                    | 2,262        |  | 1,615       
|Average Prices:                                        |                   
|Natural gas (per Mcf)                                  |                    | $      9.53  |  | $      7.07 
|Oil (per Bbl)                                          |                    | 60.46        |  | 45.54       
|Combined (per Mcfe)                                    |                    | 9.73         |  | 7.37        
|Average Costs (per Mcfe):                              |                   
|Lease operating expense                                |                    | $      1.18  |  | $      1.42 
|Production taxes, gathering and transportation expense |                    | 0.60         |  | 0.48        
|Net profit expense                                     |                    | 1.26         |  | 0.83        
|Depletion, depreciation, amortization and accretion    |                    | 1.73         |  | .30         
|General and administrative                             |                    | 2.45         |  | 3.48        
|Interest Expense                                       |                    | .48          |  | .57         

The
first  quarter  ended  November  30, 2005  resulted in net income of $456,000  compared
to a net income of $61,000 for the  quarter ended November 30, 2004.

Oil
and Gas Revenues.  Oil and gas revenues  increased  85% to $2.0 million for the three
months ended  November 30, 2005 from  approximately  $1.1  million for the same period in
2004 due to both an increase in  production  and  increases  in natural gas and oil
prices.  Average prices added  approximately  $364,000 of oil and gas revenues while
increases in average Mcfe production volumes added  approximately  $556,000 of oil and
gas  revenues.  A 10%  decrease in oil  volumes  was more than  offset by  increases  in
average gas  production  resulting  from the  development  of existing  properties.  Two
wells  located in Texas and one in Oklahoma  contributed  a  majority of the Company's
oil and gas revenues (65%), natural gas production (76%) and oil production (43%).

Comparison
of first quarter 2006 to fourth quarter 2005  production  numbers - Total net production
for the first quarter 2006  was lower than fourth  quarter 2005  production  primarily
due to  production  curtailment  of two major gas wells,  located  north of  Beaumont,
Texas,  caused by the effects of Hurricane  Rita during the first quarter 2006.  Both the
Sun Fee #1-ST (Nome Field) and the  Maness GU #1 (Constitution  Field) were shut-in as a
safety  precaution  during and immediately  after the hurricane passed just to the  east.
While not  incurring  any direct  damage  from the  hurricane,  production  from the
wells was  periodically  and  significantly  curtailed for the next month due to damage
and subsequent repair to third party  transportation and processing  facilities.
Production  levels normalized to pre-hurricane levels during the remainder of the first
quarter 2006.

15

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Lease
Operating Expenses. Our per unit of production lease operating expenses decreased
17% from $1.42 per Mcfe in the first quarter of fiscal year 2005 to $1.18 for the
same period in fiscal year 2006. This per unit of production decrease is
principally attributed to increased production volumes. Total lease operating
expenses increased 17% principally due to development of existing properties.

Production
Taxes, Gathering and Transportation Expenses. Production taxes as a percentage of
natural gas and oil revenues averaged 5.4% for the first quarter ended November 30,
2005 compared to 6.3% for the first quarter ended November 30, 2004. Production
taxes are primarily based on wellhead values of production and vary across the
different areas that our wells are located. The decrease in the average percent of
natural gas and oil sales is attributed to increased production from locations with
lower production tax rates. Total production taxes increased as a result of higher
production revenues, due to increases in both production volumes and average prices.
Gathering, transportation and other sales expenses increased by a nominal amount in
2005 compared with the same period in 2004.

Net
Profits Expense. The net profits interest agreement with Venus Exploration Trust
("Trust") agreement arose out of the acquisition of properties from Venus
Exploration Inc. ("Venus") in May 2004. The amount of the Venus Trust net
profits interest is either 25% or 50% with respect to different Venus exploration
and exploitation project areas, and decreases by one-half of its original amount
after an aggregate total of $3.3 million in net profits. The increase for the first
quarter ended November 30, 2005 compared with the same period in 2004 is attributed
to development of wells subject to the net profits agreement and related
increases in operating income from these wells. During the first quarter ended November 30, 2005,
operating profits from these wells were lower than the fourth quarter ended August 31, 2005 due to
production from these wells being curtailed during the month following the hurricanes.
As a result, net profits expense for the current quarter was lower than the previous quarter. As of
November 30, 2005, the Company has paid net profits expenses totaling $931,089.

Depletion,
Depreciation, Amortization and Accretion Expense. Depletion, depreciation,
amortization and accretion expense was $357,000 for the first quarter ended November
30, 2005 compared with $44,000 for the same period in the prior year. The increase is
principally attributed to depletion expense which increased $313,000. Depletion
expense increase is the result of a 40% increase in production volumes in the first
three months ended November 30, 2005 as compared to the same period in the prior
year. The weighted average depletion rate for the Company's full cost pool increased
from $.24 per Mcfe in the first quarter of the prior year to $1.69 per Mcfe in the first
quarter of the current year which was unchanged from the previous quarter ended August 31, 2005.
 The rate increase is attributed to the inclusion of
costs of certain impaired unevaluated properties in the amortizable base of the
full cost pool. Under the full cost pool method of accounting, impairment costs of
unevaluated properties, previously excluded from the amortizable base of the depletable
full cost pool, are added to the full cost pool depletable base resulting in an increase
in the depletion rate.

General
and Administrative Expenses. General and administrative expenses during the
quarter ended November 30, 2005 decreased by 1% from the same period in 2004. Due to
higher production volume levels, general and administrative costs per unit of
production decreased from $3.48 per Mcfe in the first quarter of the prior year to $2.45
per Mcfe for the current period

Interest
Income. Interest income increased by $27,000 to $47,000 for the first quarter ended
November 30, 2005 compared to the same period in 2004 principally due to increased
cash and short-term investments balances. The increase in cash and short-term
investment balances resulted primarily from the receipt of net proceeds from a
private placement of our common stock in October 2005.

Interest
Expense. During the quarters ended November 30, 2005 and 2004, we recorded
interest expense of $99,000 and $83,000, respectively. The interest expense,
principally associated with the Company's convertible notes due May 24, 2009, increased
due to an increase in convertible note principal balances (resulting from adding
previously accrued interest to the principal) and payment of $11,000 interest to the
Venus Trust pertaining to net profits expense. The Company elected to finance accrued
interest on the convertible notes of approximately $175,000 and $167,000 for the
quarters ended November 30, 2005 and 2004, respectively, by increasing the
outstanding balance of the Convertible Notes.

16

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Critical
Accounting Policies And Estimates

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

Reserve
Estimates:

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

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

Property,
Equipment and Depreciation:

We
follow the full cost method to account for our oil and gas  exploration  and  development
activities.  Under the full cost  method,  all costs incurred which are directly  related
to oil and gas  exploration  and  development  are capitalized and subjected to
depreciation and depletion.  Depletable costs also include estimates of future
development costs of proved reserves.  Costs related to  undeveloped  oil and gas
properties  may be excluded from  depletable  costs until those  properties are evaluated
as either proved or  unproved.  The net capitalized costs are subject to a ceiling
limitation based on the estimated present value of discounted future net  cash flows from
proved  reserves.  As a result,  we are required to estimate our proved  reserves at the
end of each quarter,  which is  subject to the  uncertainties  described  in the previous
section.  Gains or losses upon  disposition  of oil and gas  properties  are  treated as
adjustments to capitalized costs, unless the disposition represents a significant portion
of the Company's proved reserves.

Revenue
Recognition:

The
Company  recognizes  oil and gas revenues from its  interests in producing  wells as oil
and gas is produced and sold from  these  wells.  The Company  has no gas  balancing
arrangements  in place.  Oil and gas sold is not  significantly  different  from the
Company's  product  entitlement.  As of November  30,  2005,  the Company  has sold more
than its  entitlement  by 10 MMcfs with a fair  market value of approximately $95,000.

Recent
Accounting Pronouncements

In
December  2004,  the  Financial  Accounting  Standards  Board issued its final  standard
on accounting  for employee  stock  options,  SFAS No. 123  (Revised  2004), Share-Based
Payment  (SFAS 123 (R)).  SFAS 123 (R)  replaces  SFAS No. 123,  Accounting  for
Stock-Based  Compensation (SFAS 123), and supersedes APB 25, Accounting for Stock Issued
to Employees.  SFAS 123 (R) requires companies  to measure  compensation  costs for all
share-based  payments,  including grants of employee stock options,  based on the fair
value of  the awards on the grant date and to recognize  such expense  over the period
during which an employee is required to provide  services  in  exchange  for the  award.
The pro forma  disclosures  previously  permitted  under  SFAS 123 will no longer be an
alternative  to  financial statement  recognition.  For entities that file as a small
business issuer,  such as PYR Energy Corporation,  SFAS 123 (R) is  effective  for all
awards  granted,  modified,  repurchased  or cancelled  after,  and to unvested  portions
of  previously  issued and  outstanding  awards vesting for annual  periods  beginning
after  December 15, 2005,  which for us will be the first quarter of fiscal  2007.  We
are  currently  evaluating  the effect of adopting  SFAS 123 (R) on our  financial
position  and results of  operations.  We  currently  estimate  the  adoption  of SFAS
123 (R) will  result in  expenses  in amounts  that are  similar to the  current  pro
forma  disclosures under SFAS 123.

17

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ITEM 3.      CONTROLS
AND PROCEDURES

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

18

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PART II.

OTHER
INFORMATION

Item 1.   Legal
Proceedings

On
July 29,  2005,  the  Company  filed a lawsuit in the U.S.  District  Court for the
Eastern  District  of Texas,  Beaumont  Division  against Samson Lone Star Limited
Partnership  ("Samson") and Samson's  parent  company,  Samson  Resources Corp.
The Company  alleged in its  complaint  that  Samson,  the  operator  of a producing  gas
well in  Jefferson  County,  Texas named the Sun Fee No. 1  Sidetrack Well (the "Sun
Fee Well"),  has breached its  obligations  to the Company,  which owns interests in
the property on which the  Sun Fee Well is located,  by joining,  without  authorization,
the Sun Fee Well into a unit with other properties in which the Company  has no
interest,  many of which are  non-productive.  Samson has a large  interest in the
properties  that Samson has joined into the  unit.  Pursuant to Samson's  proposed
pooling  configuration,  the Company's  working and overriding  royalty  interests in the
Sun Fee  Well would be reduced  substantially.  The Company  believes  that  Samson has
no legal or  contractual  right to reduce the  Company's  interests in this manner.  The
Company is seeking  monetary  damages for all payments due and owing to the Company based
on the proper,  undiluted  interests in the property.  On September 13, 2005, the Court
entered a Preliminary  Injunction ordering Samson to return the  Company to pay status
for the  undisputed  amounts  upon which Samson had been paying the Company  prior to the
filing of the suit.  On  December 23, 2005,  Samson filed a motion for summary  judgment
on the  Company's  claims,  to which the Company  filed its response on  January 3, 2006,
rigorously denying that Samson has grounds in law or fact for the requested relief.

On
August 22, 2005,  Samson filed a lawsuit in District Court for Jefferson  County,  Texas,
58th Judicial District against the  Company,  claiming  that  Samson has the right to
serve as  operator  to drill and  operate on the  property to the east of the Sun Fee
Well,  which is located on property in which the Company owns a majority  interest.  The
Company  holds a 100%  interest in oil and gas  leases that comprise 75% of the
approximately  400-acre  parcel on which it is planning to drill a gas well to the same
reservoir from  which the Sun Fee Well  produces.  In June 2005,  the Company  notified
Samson of its  intention to drill a well on this  property and  offered Samson the
opportunity  to  participate  in the well.  Samson elected to participate in the well and
demanded to be allowed to  operate the well.  Upon the  Company's  initial  preparation
of the drill site,  which began in August  2005,  Samson  filed a lawsuit  seeking a
judicial  declaration  of Samson's  exclusive  right to operate the well and  injunctive
relief  enjoining  the Company from  continuing its drilling  operations or serving as
operator.  The Company  subsequently  completed  construction  of the drillsite.  The
Company  intends to drill the well in order to protect its  interests  in the  underlying
leases until such time as the issue is fully  adjudicated.

The
Company will continue to vigorously pursue and defend its rights with respect to the
foregoing litigations.

On
January 9, 2006, the Venus  Exploration Trust ("Trust")  dismissed the
adversary  proceeding it had filed against the Company  on November 2, 2005, in the
on-going  bankruptcy  proceeding of Venus Exploration  Company  ("Venus") in
the U.S.  Bankruptcy Court for  the Eastern District of Texas. In this proceeding,  the
Trust,  representing  the interests of the secured  creditors,  also demanded a  full
accounting and, in the future,  direct payment of the net profits interest accounts
established under the Net Profits  Conveyance  by which the Company  purchased Venus'
assets.  Through these accounts,  the Company  accounts for net proceeds from
income-generating  projects,  presently,  the Nome and Madison projects in Jefferson
County,  Texas. The Company  anticipates that final dismissal papers  will be signed and
filed in the near future.

Item 2.   
Unregistered Sales of Equity Securities and Use of Proceeds

The
information  required by this item was previously filed on October 4, October 13, and
October 26, 2005,  respectively,  on  three Forms 8-K.

Item 3.   
Defaults Upon Senior Securities

None

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

None

19

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Item 5.   Other
Information

None

Item 6.   
Exhibits

Exhibits

Exhibit Index

Number          
         Description

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

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

20

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SIGNATURES

In
accordance  with the  requirements of the Exchange Act, the Registrant has caused this
report to be signed on its behalf by  the undersigned, thereunto duly authorized.

|Signatures                 | Title | Date                                  
|-------------------------- | ----- | --------------------------------------
|/s/   D. Scott Singdahlsen |       | President, Chief Executive Officer and
|D. Scott Singdahlsen       |       | Chief Financial Officer               
|                           |       |                                       
|                           |       |                                       
|                           |       |                                       
|/s/   Jane M. Richards     |       | Principal Accounting Officer          
|Jane M. Richards           |      

21