In May of 2004, PYR acquired nearly 1 million cubic feet of production and 4.8 BCF of total proved reserves for $3.2 million from Venus Exploration. This equates to $0.67 an Mcf, with a PV10 value of $6.94 million. Included with the transaction was a specialized technical team with over 15 years of experience of working together. Oil and gas interests acquired from Venus included producing oil and gas properties, exploitation drilling projects, and exploration acreage. The Venus assets acquired included interests in 80 non-operated wells in Utah, Oklahoma and Texas. Since the acquisition, production and reserves have dramatically increased each year.

In Texas, PYR has interests in several projects from the Venus assets. Significant upside exists in workovers and offsets in mainly Yegua and Rodessa zones. To date, several recent discoveries have been made.


Wilburton Field.
In the Wilburton field located in Latimer County, Oklahoma, as of November 2006, the Scharff #7-1 was recently completed and is producing approximately 16 MMcf per day from a total of 181 net feet of commingled pay in the Cecil, Shay, and Wister B sandstone at measured depths ranging from 11,830 to 14,222 feet. Four shallower zones behind pipe contain a total of approximately 48 net feet of pay, based on log analysis. The Scharff #8-1 was recently completed after the Scharff #7-1 and is producing approximately 13 MMcf per day from a total of 112 net feet of pay in the Cecil sandstone at a measured depth of 11,300 feet, based on log analysis. Additionally, an approximate 44 net feet of pay was logged in shallower zones. The Scharff #6-1 and #5-1 continue to produce at 6 MMcf and 25 MMcf per day respectively. PYR owns a 2.42% working interest in each of the Scharff # 5-1, 6-1, 7-1, and 8-1 wells.


Hansford Project.
Located in Hansford County of the Texas Panhandle, the Hansford project 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. On December 20, 2005, the Company closed a strategic acquisition of additional interest in the Hansford project, from multiple private entities, for $1.78 million in cash. The acquisition of the Hansford County property consisted of approximately 1.64 Bcf of proved reserves and 2,265 acres of undeveloped leasehold. This acquisition allowed the Company to consolidate working interest and operations in a field which offers significant development drilling opportunities. As of August 31, 2006, in a report prepared by Ryder Scott Company, L.P., the Company’s estimated proved reserves in the Hansford project are approximately 2.5BCF, of which 65% are classified as PUD. PYR owns a 100% working interest on the majority of the acreage, which includes three producing wells, two PUD locations. The Lackey GU #2, completed earlier this year is currently producing between 200 and 300 Mcf per day. The Lackey GU #1, which underwent a work over is currently producing between 200 and 300 Mcf per day. The Company owns a 100% working interest in both the Lackey GU #1 and Lackey GU #2. Future drilling opportunities are currently being evaluated.


The Tortuga Grande Prospect
The Tortuga Grande Rodessa Prospect in Smith County, Texas, will develop the lower Rodessa reservoir found by the initial well, the Carrizo No. 1 Chisum, on the prospect acreage. The Chisum well was originally designed to test the Cotton Valley Sands on the Sand Flat turtle structure. When it was determined that the well did not contain sufficient net pay in any one interval to warrant completion and fracture stimulation in the Cotton Valley, the well was plugged back for testing the Travis Peak and Rodessa sections. The Travis Peak zone was completed. However, in order to achieve a higher production rate, the well was tested in the lower Rodessa limestone and is currently (Nov. 2006) producing 820 MCFE per day. It is anticipated that several development wells will be drilled pending a 25 square mile 3D seismic data acquisition to be acquired later this year.

The Chisum is located at a relatively high position on the Sand Flat structure, and the two nearest lower Rodessa analog wells along trend to the north have produced 5.3 BCFG and 190 MBC, and 3.3 BCFG and 115 MBC, respectively. Ultimate recoverable reserves for the Chisum and possible development wells are estimated to be approximately 3 BCFG and 105 MBC per well. The Company owns 28.75% working interest in the Chisum well and surrounding acreage. The Company and the operator also control approximately 9,800 of leasehold in the project.

The Nome Field.
The Company has producing interests in the Nome Field in Jefferson County, Texas, which produces from the Yegua formation. This field was discovered in 1994, and our interpretation of 3D seismic over the field has identified undeveloped fault blocks, structural closures, and associated bright spot locations. The Company’s first well, the Sun Fee GU #1-ST (“Sun Fee Well”), currently produces from the upper Yegua at an average rate of 7.2 MMcf/day and 365 BO/day (9.4 MMcfe/day). At the end of December 2006, the well had cumulative production of over 12.3 Bcfe. When the well reached payout on October 13, 2004 (production at that time was over 19.0 MMcfe per day), PYR was placed in pay status as a working interest participant in the well. Based on pooling of lands into the Sun Fee Sidetrack Unit (the “Sidetrack Unit”) by the operator, our current net revenue interest in the well and associated lands is 5.7%, consisting of a 5.19% working interest with a 1.5% overriding royalty interest. We and the other working interest partners control approximately 4,200 of gross leasehold acres in the project. 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 a net profits agreement with Venus Exploration Trust (“Trust”).

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 the corresponding reduction in our working interest. The outcome of the litigation will determine our working interest and revenue interest. See Part II, Item 1 of this document for further details.

An additional well, in which the Company has an 8.33% working interest, the Nome-Long #1, has been completed in the Nome Field. The well logged about 135 feet of potential Yegua gas sand. Sales from this well had been delayed pending the construction of the Nome Central Facility by the operator. With this facility now complete, the Nome-Long #1 well is currently producing at January 15, 2007, 7.0 MMcf and 230 BO per day on a 13/64th choke from limited perforations (26feet) in the Yegua Formation. The operator has indicated that it will flow test this lower interval for approximately 30 to 45 days before adding an additional 97 feet of uphole perforations to the flow stream. Our interests in wells drilled in this prospect are subject to the Trust’s initial net profits interest of 50%.

PYR has signed an AFE with the operator to drill the Nome-Harder #1, which will offset the Nome-Long #1well by approximately 2685 feet to the northeast. We expect drilling operations to begin on the Nome-Harder #1 within the next couple months. PYR is participating with an approximate 4.167% working interest in this planned 15,000 feet test of the Yegua Formation. Our interest in this well will be subject to the aforementioned Trust net profits interest of 50%.



Cotton Creek Prospect.
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 Well in the same structural fault block. PYR owns a 50% working interest in the acreage position and controls with its partner approximately 500 acres of term minerals in addition to a modest amount of term leasehold. PYR’s ownership in this prospect is not in dispute; however, the other working interest owner has connected PYR’s ownership in this project to the Bankruptcy case and has indicated that they will not participate in any activity in this prospect until the issues in the Bankruptcy case have been resolved. PYR’s ownership in this project consists of predominately a term fee mineral interest. As long as there is production elsewhere on these minerals the Company’s interest is not in danger of reverting or expiring. The Company will evaluate its options once the legal matters and partner issues have been resolved.