RESERVE PETROLEUM CO

Previous wording

We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q, and we undertake no obligation to update this information because of new information, future developments, or otherwise as required by law. You are urged to carefully review and consider the disclosures made in this and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

Current wording

We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q, and we undertake no obligation to update this information because of new information, future developments, or otherwise. You are urged to carefully review and consider the disclosures made in this and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

Previous wording

Please refer to the consolidated balance sheets and the consolidated statements of cash flows in this Form 10-Q to supplement the following discussion. In the first three months of 2026, we continued to fund our business activity using internal sources of cash. We had net cash provided by operating activities of $2,731,218 in the three months ended March 31, 2026. Our cash provided by investing activities for the three months ended March 31, 2026 was $117,342 and consisted of proceeds from disposal of property, plant and equipment of $16,740 and sales of equity securities of $100,602. Our cash applied to investing activities for the three months ended March 31, 2026 was $2,120,856 and consisted of cash for the purchase of property, plant and equipment of $1,565,418, cash for the purchase of equity securities of $202,038, and cash for the purchase of equity method and other investments of $353,400. Ourcash applied to financing activities forthe three months ended March 31, 2026 was $38,118, which consisted solely of payments on the Grand Woods note payable. Cash provided by financing activities included Grand Woods Class C non-controlling interest contributions of $19,009. Cash and cash equivalents increased $708,595 (35%) to $2,759,925 at March 31, 2026, from $2,051,330 at December 31, 2025.

Current wording

Please refer to the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows in this Form 10-Q to supplement the following discussion. In the first six months of 2026, the Company continued to fund its business activity using internal sources of cash. The Company had net cash provided by operating activities of $6,924,551 in the six months ended June 30, 2026. The Company had sales of equity securities of $121,277 and cash provided by property dispositions of $894,481, for total cash provided by investing activities of $1,015,758. The Company utilized cash for the purchase of property of $4,904,176, the purchase of equity securities of $191,170, andpurchase of investments of $449,776, for cash applied to investing activities of $5,545,122. The Company paid $1,515,944 in stockholder dividends, $1,600 for the purchase of treasury stock, and $76,260 in payments on the Grand Woods note payable, for total cash applied to financing activities of $1,593,804. Cash provided by financing activities included Grand Woods Class C non-controlling interest contributions of $40,223. Cash and cash equivalents increased $841,606 (41%) to $2,892,936 at June 30, 2026, from $2,051,330 at December 31, 2025.

Previous wording

Equity securities decreased $300,432 (7%) to $4,215,983 as of March 31, 2026, from $4,516,415 at December 31, 2025. The decrease was the result of $101,436 in net purchases and a $401,868 net decrease in market value.

Current wording

Equity securities decreased $79,005 (2%) to $4,437,410 as of June 30, 2026, from $4,516,415 at December 31, 2025. The decrease resulted from $69,893 in net purchases and a $148,898 net decrease in market value.

Previous wording

Accounts payable and other current liabilities decreased $824,845 (70%) to $357,297 as of March 31, 2026, from $1,182,142 at December 31, 2025, primarily due to invoice timing on end of year activity that was paid subsequent to year end.

Current wording

Accounts payable and other current liabilities decreased $1,038,392 (88%) to $143,750 as of June 30, 2026, from $1,182,142 at December 31, 2025, primarily due to the timing of activity and invoices.

Previous wording

Discussion of Significant Changes in the Consolidated Statements of Cash Flows. Net cash provided by operating activities was $2,731,218 in the three months ended March 31, 2026, an increase of $824,328 (43%) from cash provided by operations in the comparable period in 2025 of $1,906,890. For more information see “Operating Revenues” and “Other Income” below.

Current wording

Discussion of Significant Changes in the Consolidated Statements of Cash Flows. Net cash provided by operating activities was $6,924,551 in the six months ended June 30, 2026, an increase of $1,912,272 (38%) in net cash provided by operations in the comparable period in 2025 of $5,012,279. For more information see “Operating Revenues” and “Other Income/(Loss), Net” below.

Previous wording

Cash applied to the purchase of property, plant and equipment in the three months ended March 31, 2026, was $1,565,418, a decrease of $771,730 (33%) from cash applied to the purchase of property, plant and equipment in the comparable period in 2025 of $2,337,148. Unproved oil and gas properties account for approximately 60% of purchases, with proved oil and gas properties making up approximately 40%. Cash provided by the disposal of oil and gas properties was $16,740.

Current wording

Cash applied to the purchase of property, plant and equipment in the six months ended June 30, 2026, was $4,904,176, a decrease of $1,186,487 (19%) from cash applied to the purchase of property, plant and equipment in the comparable period in 2025 of $6,090,663. Of the $4,904,176 applied to the purchase of property, plant and equipment in the six months ended June 30, 2026, approximately $728,429 was for the purchase of unproved leasehold and minerals and approximately $4,175,747 was for the purchase of proved oil and gas assets. Cash provided by the disposal of oil and gas properties was $894,481, primarily resulting from the sale of unproved, non-producing leasehold and minerals in western Oklahoma.

Previous wording

Off-Balance Sheet Arrangements. We are a guarantor of 20% of a $620,000 development loan that matures July 15, 2028, held by QSN Office Park, LLC. We are committed to a $250,000 investment in VCC Venture Fund I, LP, of which $218,750 (87.50%) is invested at March 31, 2026. We are committed to a$400,000 investment in 14501 N Rockwell LLC, of which$116,570 (29%) is invested at March 31, 2026. For more information about these entities and the related off-balance sheet arrangements, see Note 5 to the accompanying consolidated financial statements.

Current wording

Off-Balance Sheet Arrangements. The Company is a guarantor of 20% of a $620,000 development loan that matures July 15, 2028, held by QSN Office Park, LLC. The Company is committed to a$400,000 investment in 14501 N Rockwell LLC ("Westcreek Ranch"), of which$116,570 (29%) is invested at June 30, 2026. The Company is committed to $1,168,010 for the purchase of oil and gas assets in White Whale LLC. For more information about these entities and the related off-balance sheet arrangements, see Note 5 and Note 6 to the accompanying consolidated financial statements.

Previous wording

Conclusion. Management is unaware of any additional material trends, demands, commitments, events or uncertainties, which would impact liquidity and capital resources to the extent that the discussion presented in the 2025 Form 10-K would not be representative of our current position.

Current wording

Conclusion. Management is unaware of any additional material trends, demands, commitments, events or uncertainties, which would impact liquidity and capital resources to the extent that the discussion presented in the 2025 Form 10-K would not be representative of the Company’s current position.

Previous wording

Net income decreased $771,667 (44%) to $996,418 in the three months ended March 31, 2026, from $1,768,085 in the comparable period in 2025. Net income per share attributable to common stockholders, basic, decreased $5.07 to $6.64 in the three months ended March 31, 2026, from $11.71 in the comparable period in 2025. A discussion of revenue from oil and natural gas sales and other significant line items in the consolidated statements of income follows.

Current wording

Net income attributable to common stockholders increased $581,700 (20%) to $3,556,416 in the six months ended June 30, 2026, from $2,974,716 in the comparable period in 2025. Net income per share attributable to common stockholders, basic, increased $3.86 to $23.46 in the six months ended June 30, 2026, from $19.60 in the comparable period in 2025. A discussion of revenue from oil and natural gas sales and other significant line items in the Consolidated Statements of Income follows.

Previous wording

Operating Revenues. Revenues from oil and natural gas sales increased $1,691,590 (44%) to $5,543,055 in the three months ended March 31, 2026, from $3,851,465 in the comparable period in 2025. The increase is due to an increase in oil sales of $1,108,064, an increase in natural gas sales of $628,289, and a decrease in miscellaneous oil and natural gas product sales of $44,763.

Current wording

Operating Revenues. Revenues from oil and natural gas sales increased $3,564,223 (49%) to $10,891,971 in the six months ended June 30, 2026, from $7,327,748 in the comparable period in 2025. The increase is due to an increase in oil sales of $2,883,507, an increase in natural gas sales of $730,741, and a decrease in miscellaneous oil and natural gas product sales of $50,025.

Previous wording

For both oil and natural gas sales, the price change was mostly the result of a change in the spot market prices upon which most of our oil and natural gas sales are based. These spot market prices have had significant fluctuations in the past and these fluctuations are expected to continue.

Current wording

For both oil and natural gas sales, the price change was mostly the result of a change in the spot market prices upon which most of the Company’s oil and natural gas sales are based. These spot market prices have had significant fluctuations in the past and these fluctuations are expected to continue.

Previous wording

Sales of miscellaneous oil and natural gas products were $40,286 in the three months ended March 31, 2026, compared to $85,049 in the comparable period in 2025, primarily due to decreased product sales in assets held in Ohio.

Current wording

Sales of miscellaneous oil and natural gas products were $127,082 in the six months ended June 30, 2026, compared to $177,107 in the comparable period in 2025.

Previous wording

Operating Costs and Expenses. Operating costs and expenses increased $1,674,853 (73%) to $3,958,081 in the three months ended March 31, 2026, from $2,283,228 in the comparable period of 2025. See below for analysis of changes.

Current wording

Operating Costs and Expenses. Operating costs and expenses increased $2,571,982 (53%) to $7,466,237 in the six months ended June 30, 2026, from $4,894,255 in the comparable period of 2025.

Previous wording

Equity Income in Investees. Equity income in investees increased $5,563 (14%) to $44,743 in the three months ended March 31, 2026, from $39,180 in the comparable period in 2025. Equity income was comprised of $23,339 in Broadway Sixty-Eight, LLC (“Broadway 68”), income of $16,441 in Broadway Seventy-Two, LLC (“Broadway 72”), and income of $8,137 in Victorum BRH Investment LLC, offset by a loss of $3,174 in QSN Office Park, LLC (“QSN”). See Note 5 to the accompanying financial statements for additional information on equity method investments.

Current wording

Equity Income in Investees. Equity income in investees decreased $5,308 (8%) to $57,145 in the six months ended June 30, 2026, from $62,453 in the comparable period in 2025. Income in the six months ended June 30, 2026, was made up of income of $16,386 in Broadway Sixty-Eight, LLC (“Broadway 68”), income of $26,021 in Broadway Seventy-Two, LLC (“Broadway 72”), income of $15,539 from Victorum BRH Investment, LLC, offset by a loss of $801 in QSN Office Park, LLC (“QSN”). See Note 5 to the accompanying financial statements for additional information on equity method investments.

Previous wording

Other Income/(Loss), Net. We had a loss of $362,324 in the three months ended March 31, 2026 and income of $267,703 in the comparable period in 2025. See Note 4 to the accompanying consolidated financial statements for an analysis of the components of this line item.

Current wording

Other Income/(Loss), Net. Other Loss, net was $52,419 in the six months ended June 30, 2026, as compared $829,809 income in the comparable period in 2025. See Note 4 to the accompanying consolidated financial statements for an analysis of the components of this line item.

Previous wording

Income Tax Provision. Income tax provision decreased $281,368 (51%) to $266,168 in the three months ended March 31, 2026, from $547,536 in the comparable period in 2025. Of the 2026 tax provision, the estimated current tax benefit was $11,894 and the estimated deferred tax provision was $278,062. Of the 2025 income tax provision, the estimated current tax provision was $12,234 and the estimated deferred tax provision was $535,302.

Current wording

Income Tax Provision. Income tax provision decreased $222,515 (27%) to $593,301 in the six months ended June 30, 2026, from $815,816 in the comparable period in 2025. Of the 2026 tax provision, estimated current tax benefit was $11,335 and estimated deferred tax provision was $604,636. Of the 2025 income tax provision, the estimated current tax provision was $2,602 and the estimated deferred tax provision was $813,214.

Previous wording

The $1,108,064 (42%) increase in oil sales to $3,750,765 in the three months ended March 31, 2026, from $2,642,701 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per barrel (Bbl). The volume of oil sold increased 13,446 Bbls to 53,350 Bbls in the three months ended March 31, 2026, from 39,904 Bbls in the comparable period in 2025, resulting in a positive volume variance of $890,529. The average price per Bbl increased $4.07 to $70.30 per Bbl in the three months ended March 31, 2026, from $66.23 per Bbl in the comparable period in 2025, resulting in a positive price variance of $217,535.

Current wording

The $1,775,443 (73%) increase in oil sales to $4,222,349 in the three months ended June 30, 2026, from $2,446,906 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per barrel (Bbl). The volume of oil sold increased 2,443 Bbls to 45,977 Bbls in the three months ended June 30, 2026, resulting in a positive volume variance of $137,321. The average price per Bbl increased $35.63 to $91.84 per Bbl in the three months ended June 30, 2026, from $56.21 per Bbl in the comparable period in 2025, resulting in a positive price variance of $1,638,122.

Previous wording

The $628,289 (56%) increase in natural gas sales to $1,752,004 in the three months ended March 31, 2026, from $1,123,715 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per thousand cubic feet ("MCF"). The volume of natural gas sold increased 120,078 MCF to 384,014 MCF in the three months ended March 31, 2026, from 263,936 MCF in the comparable period in 2025, resulting in a positive volume variance of $511,532. The average price per MCF increased $0.30 to $4.56 per MCF in the three months ended March 31, 2026, from $4.26 per MCF in the comparable period in 2025, resulting in a positive price variance of $116,757.

Current wording

The $102,454 (11%) increase in natural gas sales to $1,039,772 in the three months ended June 30, 2026, from $937,318 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per MCF. The volume of natural gas sold increased 34,947 MCF to 362,745 MCF in the three months ended June 30, 2026, from 327,798 MCF in the comparable period in 2025, resulting in a positive volume variance of $99,948. The average price per MCF increased $0.01 to $2.87 per MCF in the three months ended June 30, 2026, from $2.86 per MCF in the comparable period in 2025, resulting in a positive price variance of $2,506.

Previous wording

Production Costs. Production costs increased $183,475 (18%) to $1,231,836 in the three months ended March 31, 2026, from $1,048,361 in the comparable period in 2025. Lease operating expenses increased $73,786 (11%). Gas deductions and other costs increased $19,968 (14%). Gross production taxes increased $89,721 (43%).

Current wording

Production Costs. Production costs increased $212,110 (20%) to $1,257,629 in the three months ended June 30, 2026, from $1,045,519 in the comparable period in 2025. Lease operating expenses increased $93,298 (13%), gas deductions and other costs increased by $12,019 (8%), and gross production taxes increased $106,793 (58%).

Previous wording

Exploration Costs. Exploration costs increased $370,106 (355%) to $474,385 in the three months ended March 31, 2026, from $104,279 in the comparable period in 2025, due to increases of $433,528 in dry hole and plugging costs, and $1,839 in geological and geophysical and other expenses, offset by a decrease of $65,261 in cancelled and expired leases.

Current wording

Exploration Costs. Exploration costs decreased $136,286 to $(21,865) in the three months ended June 30, 2026, from $114,421 in the comparable period in 2025, due to decreased dry hole and plugging costs of $138,536, offset by an increase of $2,250 in geological and geophysical and other costs.

Previous wording

Depreciation, Depletion, Amortization and Valuation Provision (DD&A). DD&A increased $569,465 (63%) to $1,477,343 in the three months ended March 31, 2026, from $907,878 in the comparable period in 2025, primarily due to an increase in production from new wells.

Current wording

Depreciation, Depletion, Amortization and Valuation Provision (DD&A). DD&A increased $834,441 (93%) to $1,731,967 in the three months ended June 30, 2026, from $897,526 in the comparable period in 2025, due to an increase in long-lived assets impairments of $412,361 and a $422,080 net increase in depletion, depreciation, and amortization.

Previous wording

Gain/(Loss) on Disposition of Oil and Gas Properties. We had a loss on the sale of unproved, non-producing leasehold of $97,206 in the three months ended March 31, 2026, with a gain on sale of $492,282 in the the comparable period in 2025.

Current wording

Gain on Disposition of Oil and Gas Properties. We had a gain on the sale of unproved, non-producing leasehold of $151,290 in the three months ended June 30, 2026, with $123,093 in the the comparable period in 2025.