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PYRAMID OIL COMPANY
P. O. Box 832
Bakersfield, CA 93302
(661)325-1000
December 14, 2006
United States Securities and Exchange Commission
Washington, D.C. 20549-7010
Attention: Karl Hiller
Branch Chief
Corporate Finance
Re: Pyramid Oil Company
Form 10-KSB for the Fiscal Year Ended December 31, 2005
Filed March 27, 2006
File No. 0-5525
Dear Mr. Hiller:
Reference is made to the comments of the Staff of the Securities and Exchange
Commission (the "SEC") with respect to the above-referenced filing on Form 10-
KSB of Pyramid Oil Company, a California corporation (the "Company"), in your
letter dated December 8, 2006 (the "Comment Letter") addressed to Mr. Lee G.
Christianson, Chief Financial Officer of the Company.
We are writing to respond to the comments and, where appropriate, to show you
what the applicable revisions will look like in the amended and future
filings. The numbered paragraphs and headings below correspond to the headings
and numbers set forth in the Comment Letter.
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2005
Financial Statements - Statement of Operations, page 29
STAFF COMMENT
1. We note that you recorded termination costs, gain on sale of property
and equipment, and loss on disposal of assets below operating income in your
statement of operations. These types of costs are ordinarily reported within
the operating section of the statements of operations under generally accepted
accounting principles. The termination costs appear to be general and
administrative, as these were paid to your vice president, while the gains and
losses on disposals of long-lived assets must be presented in income from
operation under paragraph 45 of SFAS 144.
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COMPANY RESPONSE
The Company concurs with the comment addressing the termination costs and
will amend Form 10-KSB for the years ended December 31, 2005 and 2004 to
comply with the guidance of SAB Topic 5-P. The termination costs will be
presented as a component of income from continuing operations, separately
disclosed since the amount appears to be material.
The Company concurs with the comment addressing a gain on sale of
property and equipment and will amend Form 10-KSB for the years ended December
31, 2005 and 2004 to comply with the guidance of paragraph 45 of SFAS 144.
The gain on sale of property will be presented as a component of income from
continuing operations, separately disclosed since the amount appears to be
material.
FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 2006
FINANCIAL STATEMENTS - General
STAFF COMMENT
2. The title of note five of your financial statements states 'Changes
in Accounting Principle'. As this note discusses asset retirement
obligations, the title appears to be to be labeled inappropriately.
COMPANY RESPONSE
The Company concurs with the comment and will revise the title to read as
follows: 'Liability for Asset Retirement Obligation'.
CONTROLS AND PROCEDURES, page 13
STAFF COMMENT
3. We note that you discuss Section 404 disclosure requirements of the
Sarbanes-Oxley Act which will be effective for fiscal years ending on or after
July 14, 2006. However, you are required to include the disclosure specified
in item 307 and 308 of Regulation S-B in the reports you currently have on
file.
Similarly, the related disclosures in the Form 10-QSB's that you filed
for the quarters ended March 31, 2006 and June 30, 2006 do not comply with
these requirement in several respects, including the timing of the evaluation,
the period referenced in concluding on changes in your internal controls, and
the reference to internal controls, rather than internal controls over
financial reporting.
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COMPANY RESPONSE
The Company concurs with the comment and will revise Item 4 of the above
mentioned Forms 10-QSB to read as follows:
'Our Chief Executive Officer and Chief Financial Officer have concluded,
based on their evaluation as of the end of the period covered by this report,
that our disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) are effective to ensure
that information required to be disclosed in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures.'
'There was no change in our internal control over financial reporting
that occurred during the quarter and nine months ended September 30, 2006 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.'
In connection with our responding to your comments, the Company
acknowledge's the following:
The Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
Staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the
filing;
The Company will not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
Please contact the undersigned at (661)325-1000 should you require
additional information or have any questions.
Very truly yours,
LEE G. CHRISTIANSON
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Lee G. Christianson