RESERVE PETROLEUM CO

Previous wording

In 2024, net cash provided by operating activities was $7,919,307, net cash applied to investing activities was $6,974,877 and net cash applied to financing activities was $2,239,082.

Current wording

In 2025, net cash provided by operating activities was $9,941,805, net cash applied to investing activities was $10,161,873 and net cash applied to financing activities was $1,652,424.

Previous wording

Equity securities decreased $162,872 (6%) to $2,501,194 in 2024 from $2,664,066 in 2023. The decrease is due to sales in excess of purchases of $686,375, offset by a net increase in market value of $523,503.

Current wording

Equity securities increased $2,015,221 (81%) to $4,516,415 in 2025 from $2,501,194 in 2024. The increase is due to purchases in excess of sales of $385,677, and a net increase in market value of $1,629,544.

Previous wording

Refundable income taxes decreased $81,273 (26%) to $236,482 in 2024 from $317,755 in 2023, primarily resulting from increased taxable income that resulted in increases in the tax provision.

Current wording

Refundable income taxes increased $45,829 (19%) to $282,311 in 2025 from $236,482 in 2024, primarily resulting from estimated federal tax deposits.

Previous wording

Accounts payable decreased $17,614 (3%) to $520,182 in 2024 from $537,796 in 2023, primarily due to the timing of payable processing.

Current wording

Accounts payable increased $647,711 (125%) to $1,167,893 in 2025 from $520,182 in 2024, primarily due to the timing of activity and invoices.

Previous wording

Net cash flows provided by operating activities increased $2,326,454 (42%) to $7,919,307 in 2024 from net cash provided by operating activities of $5,592,853 in 2023. For more information on operating activities, see “Operating Revenues” and “Other Income, Net” below.

Current wording

Net cash flows provided by operating activities increased $2,022,498 (26%) to $9,941,805 in 2025 from net cash provided by operating activities of $7,919,307 in 2024. For more information on operating activities, see “Operating Revenues” and “Other Income, Net” below.

Previous wording

Net cash applied to investing activities increased $984,137 (16%) to $6,974,877 in 2024, from net cash applied to investing activities of $5,990,740 in 2023. The 2024 amount was the result of net redemptions of available-for-sale debt securities of $2,220,901, net property purchases of $9,671,374, cash applied to equity method and other investments of$210,779 and net cash provided by equity securities of $686,375.

Current wording

Net cash applied to investing activities increased $3,186,996 (46%) to $10,161,873 in 2025, from net cash applied to investing activities of $6,974,877 in 2024. The 2025 amount was the result of net property purchases of $10,009,712, cash provided by equity method and other investments of$233,516 and net cash applied to equity securities of $385,677.

Previous wording

Net cash applied to financing activities increased $556,220 (33%) to $2,239,082 in 2024 from net cash applied to financing activities of $1,682,862 in 2023. The 2024 amount was the result of$10 per share cash dividends paid on common stock of $1,546,874, treasury stock purchases of $596,814, payments of principal on the Grand Woods note payable of $142,136, and capital contributions from Grand Woods non-controlling interests of $46,742.

Current wording

Net cash applied to financing activities decreased $586,658 (26%) to $1,652,424 in 2025 from net cash applied to financing activities of $2,239,082 in 2024. The 2025 amount was the result of $10 per share cash dividends paid on common stock of $1,517,794, treasury stock purchases of $55,265, payments of principal on the Grand Woods note payable of $147,863, and capital contributions from Grand Woods non-controlling interests of $68,498.

Previous wording

In 2024 we had net income attributable to common stockholders of $2,029,278 compared to net loss of $55,648 in 2023. Net income per share attributable to common stockholders, basic and diluted, was $13.18 in 2024, an increase of $13.54 per share from net loss of $0.36 in 2023.

Current wording

In 2025 we had net income attributable to common stockholders of $4,903,715 compared to net income of $2,029,278 in 2024. Net income per share attributable to common stockholders, basic and diluted, was $32.32 in 2025, an increase of $19.14 per share from net income of $13.18 in 2024.

Previous wording

Operating revenues increased $2,619,561 (20%) to $15,995,663 in 2024 from $13,376,102 in 2023. Oil and gas sales increased $2,649,488 (21%) to $15,139,535 in 2024 from $12,490,047 in 2023. Lease bonuses and other revenues increased $4,565 (2%) to $195,153 in 2024 from $190,588 in 2023. Water well drilling services decreased $34,492 (5%) to $660,975 in 2024 from $695,467 in 2023, mainly due to the termination of the TWS Agreement with TWS South on April 19, 2024.

Current wording

Operating revenues increased $1,445,498 (9%) to $17,441,161 in 2025 from $15,995,663 in 2024. Oil and gas sales increased $1,560,419 (10%) to $16,699,954 in 2025 from $15,139,535 in 2024. Lease bonuses and other revenues increased $546,054 (280%) to $741,207 in 2025 from $195,153 in 2024. Water well drilling services decreased $660,975 (100%) to $0 in 2025 from $660,975 in 2024, due to the termination of the TWS Agreement in 2024.

Previous wording

The $2,649,488 increase in oil and gas sales was the result of a $565,786 increase in gas sales, a $1,971,009 increase in oil sales and a $112,693 increase in miscellaneous oil and gas product sales.

Current wording

The $1,560,419 increase in oil and gas sales was the result of a $2,080,947 increase in gas sales, a $459,155 decrease in oil sales and a $61,373 decrease in miscellaneous oil and gas product sales.

Previous wording

The following price and volume analysis is presented to explain the changes in oil and gas sales from 2023 to 2024. Miscellaneous oil and gas product sales of $409,195 in 2024 and $296,502 in 2023 are not included in the analysis.

Current wording

The following price and volume analysis is presented to explain the changes in oil and gas sales from 2024 to 2025. Miscellaneous oil and gas product sales of $347,822 in 2025 and $409,195 in 2024 are not included in the analysis.

Previous wording

The $565,786 (26%) increase in natural gas sales to $2,721,772 in 2024 from $2,155,986 in 2023 was the cumulative result of an increase in gas sales volumes and a decrease in the average price received per thousand cubic feet (MCF). The average price per MCF of natural gas sales decreased $0.08 per MCF to $2.72 per MCF in 2024 from $2.80 per MCF in 2023, resulting in a negative gas price variance of $82,323. A positive volume variance of $647,077 was the result of an increase in natural gas volumes sold of 230,730 MCF to 999,494 MCF in 2024 from 768,764 MCF in 2023.

Current wording

The $2,080,947 (76%) increase in natural gas sales to $4,802,719 in 2025 from $2,721,772 in 2024 was the cumulative result of an increase in gas sales volumes and an increase in the average price received per thousand cubic feet (MCF). The average price per MCF of natural gas sales increased $0.84 per MCF to $3.56 per MCF in 2025 from $2.72 per MCF in 2024, resulting in a positive gas price variance of $1,131,551. A positive volume variance of $949,396 was the result of an increase in natural gas volumes sold of 348,663 MCF to 1,348,157 MCF in 2025 from 999,494 MCF in 2024.

Previous wording

As disclosed in Supplemental Schedule 1 of the Unaudited Supplemental Financial Information included in Item 8 below, working interests in natural gas extensions and discoveries were not adequate to replace working interest reserves produced in 2024 or 2023.

Current wording

As disclosed in Supplemental Schedule 1 of the Unaudited Supplemental Financial Information included in Item 8 below, working interests in natural gas extensions and discoveries were adequate to replace working interest reserves produced in 2025 and 2024.

Previous wording

The $1,971,009 (20%) increase in crude oil sales to $12,008,568 in 2024 from $10,037,559 in 2023 was the cumulative result of a decrease in the average price per barrel (Bbl) and an increase in oil sales volumes. The average price received per Bbl of oil decreased $2.49 to $72.35 in 2024 from $74.84 in 2023, resulting in a negative oil price variance of $413,213. A positive volume variance of $2,384,275 was the result of an increase in oil sales volumes of 31,859 Bbls to 165,984 Bbls in 2024 from 134,125 Bbls in 2023.

Current wording

The $459,155 (4%) decrease in crude oil sales to $11,549,413 in 2025 from $12,008,568 in 2024 was the result of a decrease in the average price per barrel (Bbl), offset by an increase in oil sales volumes. The average price received per Bbl of oil decreased $12.32 to $60.03 in 2025 from $72.35 in 2024, resulting in a negative oil price variance of $2,369,412. A positive volume variance of $1,910,257 was the result of an increase in oil sales volumes of 26,403 Bbls to 192,387 Bbls in 2025 from 165,984 Bbls in 2024.

Previous wording

As disclosed in Supplemental Schedule 1 of the Unaudited Supplemental Financial Information included below in Item 8, working interests in oil extensions and discoveries were adequate to replace working interest reserves produced in 2024 and were not in 2023.

Current wording

As disclosed in Supplemental Schedule 1 of the Unaudited Supplemental Financial Information included below in Item 8, working interests in oil extensions and discoveries were not adequate to replace working interest reserves produced in 2025 and 2024.

Previous wording

Operating costs and expenses decreased $1,070,966 (7%) to $13,576,602 in 2024 from $14,647,568 in 2023.

Current wording

Operating costs and expenses decreased $589,724 (4%) to $13,154,634 in 2025 from $13,744,358 in 2024.

Previous wording

Production Costs. Production costs increased $198,786 (5%) to $4,582,170 in 2024 from $4,383,384 in 2023. The increase was the cumulative result of a $181,123 (6%) decrease in lease operating expense to $3,043,235 in 2024 from $3,224,358 in 2023, a $75,585 (10%) increase in gross production taxes to $814,017 in 2024 from $738,432 in 2023, and a $304,324 (72%) increase in processing deductions to $724,918 in 2024 from $420,594 in 2023.

Current wording

Production Costs. Production costs increased $157,917 (3%) to $4,740,087 in 2025 from $4,582,170 in 2024. The increase was the cumulative result of a $98,606 (3%) increase in lease operating expense to $3,141,841 in 2025 from $3,043,235 in 2024, a $69,587 (9%) increase in gross production taxes to $883,604 in 2025 from $814,017 in 2024, and a $10,276 (1%) decrease in processing deductions to $714,642 in 2025 from $724,918 in 2024.

Previous wording

Exploration Costs. Under the successful efforts method of accounting used by the Company, geological and geophysical costs are expensed as incurred, as are the costs of unsuccessful exploratory drilling. The costs of successful exploratory drilling and all development costs are capitalized. Total costs of exploration and development, excluding asset retirement obligations but inclusive of geological and geophysical costs, were $8,088,232 in 2024 and $3,709,672 in 2023. See Item 8, Note 10 to the accompanying consolidated financial statements for a breakdown of these costs. Exploration and acquisition costs charged to operations were $439,059 in 2024 and $708,823 in 2023, inclusive of geological and geophysical costs of $38,217 in 2024 and $120,556 in 2023.

Current wording

Exploration Costs. Under the successful efforts method of accounting used by the Company, geological and geophysical costs are expensed as incurred, as are the costs of unsuccessful exploratory drilling. The costs of successful exploratory drilling and all development costs are capitalized. Total costs of exploration and development, excluding asset retirement obligations but inclusive of geological and geophysical costs, were $9,757,474 in 2025 and $8,088,232 in 2024. See Item 8, Note 10 to the accompanying consolidated financial statements for a breakdown of these costs. Exploration and acquisition costs charged to operations were $441,188 in 2025 and $439,059 in 2024, inclusive of geological and geophysical costs of $41,625 in 2025 and $38,217 in 2024.

Previous wording

For the year ended December 31, 2024, We participated in the drilling of 11 gross exploratory working interest wells and 19 gross development working interest wells, with working interests ranging from a high of 18.0% to a low of 0.25%. Of the 11 exploratory wells, 4 were completed as producing wells, 4 as dry holes and 3 wells were in progress at the end of 2024. Of the 19 development wells, 15 were completed as producing wells and 4 wells were in progress at the end of 2024.

Current wording

For the year ended December 31, 2025, We participated in the drilling of 10 gross exploratory working interest wells and 39 gross development working interest wells, with working interests ranging from a high of 9.0% to a low of 0.06%. Of the 10 exploratory wells, 2 were completed as producing wells, 6 as dry holes and 2 wells were in progress at the end of 2025. Of the 39 development wells, 33 were completed as producing wells and 6 wells were in progress at the end of 2025.

Previous wording

Water Well Drilling Services. Water well drilling services expenses decreased $640,313 (60%) to $432,163 from $1,072,476 in 2023. The decrease resulted from the April 19, 2024 termination of the TWS JVA with TWS South for water well drilling services. See Item 8, Note 8 to the accompanying consolidated financial statements for additional information on TWS.

Current wording

Water Well Drilling Services. Water well drilling services expenses decreased $432,163 (100%) to $0 from $432,163 in 2024. The decrease resulted from the April 19, 2024 termination of the TWS JVA with TWS South for water well drilling services. See Item 8, Note 8 to the accompanying consolidated financial statements for additional information on TWS.

Previous wording

Depreciation, Depletion, Amortization and Valuation Provisions (DD&A). Major components of DD&A are the provision for impairment of undeveloped leaseholds, provision for impairment of long-lived assets, depletion of producing leaseholds and depreciation of tangible and intangible lease and well costs. Undeveloped leaseholds are amortized over the life of the leasehold (most are 3 years) using a straight-line method, except when the leasehold is impaired or condemned by drilling and/or geological interpretation of seismic data; if so, an adjustment to the provision is made at the time of impairment. The provision for impairment of undeveloped leaseholds was $56,881 and $378,358 in December 31, 2024 and 2023, respectively.

Current wording

Depreciation, Depletion, Amortization and Valuation Provisions (DD&A). Major components of DD&A are the provision for impairment of undeveloped leaseholds, provision for impairment of long-lived assets, depletion of producing leaseholds and depreciation of tangible and intangible lease and well costs. Undeveloped leaseholds are amortized over the life of the leasehold (most are 3 years) using a straight-line method, except when the leasehold is impaired or condemned by drilling and/or geological interpretation of seismic data; if so, an adjustment to the provision is made at the time of impairment. The provision for impairment of undeveloped leaseholds was $52,202 and $56,881 in December 31, 2025 and 2024, respectively.

Previous wording

As discussed in Item 8, Note 11 to the accompanying consolidated financial statements, accounting principles require the recognition of an impairment loss on long-lived assets used in operations when indicators of impairment are present. Impairment evaluation is a two-step process. The first step is to measure when the undiscounted cash flows estimated to be generated by those assets, determined on a well-by-well basis, is less than the assets’ carrying amounts. The second step is to adjust those assets meeting the first criterion to estimated fair value. Evaluation for impairment was performed in both 2024 and 2023 with impairment losses of $1,949,148 and $2,393,015, respectively.

Current wording

As discussed in Item 8, Note 11 to the accompanying consolidated financial statements, accounting principles require the recognition of an impairment loss on long-lived assets used in operations when indicators of impairment are present. Impairment evaluation is a two-step process. The first step is to measure when the undiscounted cash flows estimated to be generated by those assets, determined on a well-by-well basis, is less than the assets’ carrying amounts. The second step is to adjust those assets meeting the first criterion to estimated fair value. Evaluation for impairment was performed in both 2025 and 2024 with impairment losses of $1,540,705 and $1,949,148, respectively.

Previous wording

The depletion and depreciation of oil and gas properties are computed by the units-of-production method. The amount expensed in any year will fluctuate with the change in estimated reserves of oil and gas, a change in the rate of production or a change in the basis of the assets. The provision for depletion and depreciation was $3,157,718 and $3,074,927 in 2024 and 2023, respectively. The provision includes $42,590 and $110,832 in 2024 and 2023, respectively, for the amortization of the asset retirement costs. See Item 8, Note 3 to the accompanying consolidated financial statements for additional information regarding the asset retirement obligation. The provision for depreciation for other assets was $55,248 in 2024 and $49,170 in 2023.

Current wording

The depletion and depreciation of oil and gas properties are computed by the units-of-production method. The amount expensed in any year will fluctuate with the change in estimated reserves of oil and gas, a change in the rate of production or a change in the basis of the assets. The provision for depletion and depreciation was $4,290,427 and $3,157,718 in 2025 and 2024, respectively. The provision includes $52,550 and $42,590 in 2025 and 2024, respectively, for the amortization of the asset retirement costs. See Item 8, Note 3 to the accompanying consolidated financial statements for additional information regarding the asset retirement obligation. The provision for depreciation for other assets was $52,025 in 2025 and $55,248 in 2024.

Previous wording

Gain on Disposition of Oil and Gas Properties. We had a gain on oil and gas property sales of $172,935 and $19,491 in 2024 and 2023, respectively, resulting from sales of leasehold in western Oklahoma.

Current wording

Gain on Disposition of Oil and Gas Properties. We had a gain on oil and gas property sales of $793,764 and $172,935 in 2025 and 2024, respectively, resulting from sales of leasehold in western Oklahoma.

Previous wording

General, Administrative and Other (G&A). G&A increased $470,244 (18%) to $3,077,150 from $2,606,906 in 2023. The increase was primarily due to increases of $287,345 in human resource costs and bad debt expense of $465,977 related to TWS accounts receivable, offset by decreases of $243,468 in consulting fees and $48,171 in legal and regulatory fees, with a net increase in all other G&A accounts of $8,561.

Current wording

General, Administrative and Other (G&A). G&A decreased $420,588 (14%) to $2,656,562 from $3,077,150 in 2024. The decrease was primarily due to decreases of $63,373 in human resource costs, bad debt expense of $435,977 related to TWS accounts receivable, and IT costs of $17,762 offset by increases of $76,899 in consulting fees and $21,013 in regulatory fees, legal fees and taxes, with a net decrease in all other G&A accounts of $1,388.

Previous wording

Equity income in investees was $112,481 in 2024 and $107,865 in 2023. The 2024 net income consisted of Broadway Sixty-Eight, LLC (“Broadway 68”) income of $20,418, Broadway Seventy-Two, LLC (“Broadway 72”) income of $38,678, Victorum BRH Investment, LLC ("BRH") income of $79,019, Stott's Mill("Stott's Mill") loss of $23,675 and QSN Office Park, LLC (“QSN”) loss of $1,959.

Current wording

Equity income in investees was $59,922 in 2025 and $112,481 in 2024. The 2025 net income consisted of Broadway Sixty-Eight, LLC (“Broadway 68”) income of $33,933, Broadway Seventy-Two, LLC (“Broadway 72”) income of $37,369, Victorum BRH Investment, LLC ("BRH") income of $31,440, offset by the Stott's Mill ("Stott's Mill") loss of $40,071 and QSN Office Park, LLC (“QSN”) loss of $2,749.

Previous wording

Other income, net was $24,086 in 2024 and $970,586 in 2023. See Item 8, Note 12 to the accompanying consolidated financial statements for a breakdown of Other Income, net. The material components of Other Income, Net are discussed below.

Current wording

Other income, net was $1,847,233 in 2025 and $191,842 in 2024. See Item 8, Note 12 to the accompanying consolidated financial statements for a breakdown of Other Income, net. The material components of Other Income, Net are discussed below.

Previous wording

Net realized and unrealized gain on equity securities was $375,461 in 2024 and $115,603 in 2023. In 2024, we had realized gains of $66,168 and unrealized gains of $309,293. In 2023, we had realized losses of $248,329 and unrealized gains of $363,932.

Current wording

Net realized and unrealized gain on equity securities was $1,629,544 in 2025 and $375,461 in 2024. In 2025, we had realized losses of $36,760 and unrealized gains of $1,666,304. In 2024, we had realized gains of $66,168 and unrealized gains of $309,293. Unrealized gains in 2025 were primarily due to the increase in market value of one stock, Chilean Cobalt Corporation of $1,450,814.

Previous wording

Income from other investments decreased $307,801 (85%) to $55,937 in 2024 from $363,738 in 2023. Income in 2023 was from a sale of land by OKC Industrial Properties, LC.

Current wording

Income from other investments increased $366,762 (656%) to $422,699 in 2025 from $55,937 in 2024, primarily resulting from $398,518 in income from the sale of all remaining acreage in OKC Industrial Properties, LC.

Previous wording

In 2024, Loss on Deconsolidation of TWS South, LLC totaled $296,717 and impairment of other investments totaled $318,894. For more information on the loss on deconsolidation, please see Item 8, Note 8 – Non-Controlling Interests and Variable Interest Entities. For more information on impairment of other investments, please See Item 8, Note 7 – Investments and Related Commitments and Contingent Liabilities, Including Guaranties.

Current wording

Impairment of other investments increased $208,617 to $527,511 in 2025 from $318,894 in 2024, primarily due to impairment of Cloudburst International, Inc. of $356,007 and one VCC investment of $81,504. For more information on the loss on deconsolidation in 2024, please see Item 8, Note 8 – Non-Controlling Interests and Variable Interest Entities. For more information on impairment of other investments, please See Item 8, Note 7 – Investments and Related Commitments and Contingent Liabilities, Including Guaranties.

Previous wording

In 2024, we had an estimated income tax provision of $499,399 as the result of a deferred tax provision of $434,446 and a current tax provision of $64,953. In 2023, we had an estimated income tax benefit of $171,401 as the result of a deferred tax benefit of $400,084 and a current tax provision of $228,683. See Item 8, Note 6 to the accompanying consolidated financial statements for an analysis of the various components of income taxes and a discussion of the federal tax rate change.

Current wording

In 2025, we had an estimated income tax provision of $1,265,135 as the result of a deferred tax provision of $1,252,559 and a current tax provision of $12,576. In 2024, we had an estimated income tax provision of $499,399 as the result of a deferred tax provision of $434,446 and a current tax provision of $64,953. See Item 8, Note 6 to the accompanying consolidated financial statements for an analysis of the various components of income taxes and a discussion of the federal tax rate change.